EUR/USD Is In Breakout Mode

4-Hour EUR/USD

The 240-minute EUR/USD is in the middle of a trading range. As such, there’s always a good buy and sell setup. The bears see a Head-and-Shoulders Top Bear Flag (pink) while bulls see a Double Bottom Higher Low Major Trend Reversal (Green). The chart is in breakout mode and the probability of its direction is about the same for bulls and bears. As a result of the bear trend leading up to the trading range, the bears have a slight advantage.

Reduced Probability

I’ve said many times since the big bear breakout 2 weeks ago on the daily EUR/USD that we were headed for a trading range. Both bulls and bears correctly see it as a bear flag. Yet every bar that gets added reduces the probability of a bear trend.

Because the bear breakout was the biggest bear bar in a bear trend that has lasted a long time, there is a 60% chance that it is an exhaustive sell climax. As a result, a breakout below its low will probably reverse up and add more bars to the trading range. Every trading range eventually has a successful breakout — up or down. There is no sign yet that a breakout is imminent. Consequently, the trading range price action will probably continue.

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