Technical analysis of EUR/USD Daily Chart

On the EUR/USD daily Forex chart, today so far is a bull inside day after yesterday’s big outside down day. Today will be a buy signal bar for a High 1 bull flag.

The EUR/USD daily chart had a big outside down day yesterday. After a 5-day rally, the bears will probably need a micro double top if they will be able to continue the bear channel.

If today remains a bull inside day and tomorrow trades above today’s high, but then reverses down from Monday’s high, the bears will have a micro double top. They hope that it would lead to a break below the November 12 wedge bottom and continue the 2-month selloff. Their goal is a 600 pip measured move down from the 6 month trading range. They have a 40% chance of success.

Since the 5-day rally was strong, the bulls will buy the 1st selloff, even if it is deep. For example, it might retest the October 31 low. There would then probably be a rally back up to at least this week’s high. Because the weekly chart has a wedge bull flag and the daily chart has a wedge bottom, the daily chart will probably trade sideways to up for at least a couple more weeks. In addition, the rally will probably test lower highs, like the November 7 high.

The daily chart will probably test the October 16 major lower high within a couple of months. This is because that was the start of the channel that followed the late September spike down. Typically, a Spike and Channel bear trend breaks above the bear channel, rallies to the beginning of the channel, and evolves into a trading range.

Overnight EUR/USD Trading

The EUR/USD 5-minute chart rallied 60 pips overnight from above yesterday’s low. Since the bulls have done enough to create a good buy signal bar, there is no incentive to rally much more today. Therefore today will probably enter a trading range for the rest of the day.

The bears want a reversal down from the overnight wedge rally. But, the best they probably can achieve is a transition into a 40-pip trading range. Day traders have been scalping overnight and they probably will continue today.

Read more:

• NZD/JPY – Short with the main movement after a price action signal
• Jeffrey Gundlach: “USD’s next move is going to be down”
• Here’s a cable forecast for $1.40 till end of 2020
• NZD to 0.59 at end of Q1 2020
• Support for risky currencies as trade war hopes grow