The EUR/USD on the daily chart is breaking strongly above the top of its yearlong trading range. Today so far is the 2nd consecutive big bull bar closing on its high and above the March high. If today closes near its high, the 2 day breakout will be strong enough for traders to expect at least a small 2nd leg up after the 1st 1 – 3 day pullback. But if it closes below its midpoint, there is an increased chance that a 2 week pullback could begin this week.
EURUSD Forex breakout above yearlong trading range but buy climax
When an exceptionally strong breakout comes late in a bull trend, it is usually climactic. That means it typically will attract some profit-taking, usually after a brief 2nd leg up.
Since this is the 3rd leg up, the bears want a major reversal down from a wedge top. But it is a strong breakout of a long base. Consequently, the best the bears can probably get over the next few weeks is a 2 week pullback to the June 10 high. That is a breakout point and it is around the EMA. Traders now expect the rally to continue up to the September 2018 high of around 1.18 over the next few months.
Overnight EUR/USD Forex trading
The 5 minute chart of the EUR/USD Forex market has been continuing yesterday’s rally. Today’s close is important. The more today closes near the high, the stronger the breakout on the daily chart. It would increase the chance of at least a small 2nd leg up after a a 2 – 3 day pullback.
The bulls will, therefore, buy pullbacks today. But today’s range is almost as big as yesterday’s. Today will probably not go much higher. They simply want today to close near its high.
The bears want today to close below the midpoint of the day’s range. That would be a sign that profit-taking is beginning. It would increase the chance of a pullback to the daily EMA and the June 10 high within a week or two. Consequently, the bears will sell reversals down from the high of the day.
Since today will probably not get much higher, yet the bulls want it to close near the high, the rally will probably evolve into a trading range within the next hour. After an hour or two of sideways trading, the bears would have a better chance of a reversal down to below the midpoint of today’s range. There is only a small chance of a big bear trend down to the low of the day.