The EUR/USD daily Forex chart reversed up strongly overnight from a double bottom and a nested wedge bottom.
During every strong rally and every strong selloff for the 6 months, I have said the same thing. Trading ranges resist breaking out. Any strong move up or down has an 80% chance of reversing.
The EUR/USD daily Forex chart reversed up strongly overnight from a double bottom with the August 15 low. Furthermore, there is a nested wedge bottom. That increases the chance of a rally over the next 2 weeks.
The 1st targets are the 20-day EMA, the October 9 low breakout point, and a 50% retracement of the October 16 selloff. Next, the bulls will try to create a higher low and then test the October 16 major lower high.
There is always a bear case, and it always has at least a 40% chance of success, as it does here. The bears hope that the overnight rally will fail around the 1st targets, lead to a bear flag, and reverse strongly below the August low.
Overnight EUR/USD Forex Trading
The EUR/USD 5-minute Forex chart rallied 100 pips overnight. Because that is about the same size as other big days, there probably will not be much higher prices today.
This especially true since the rally has had 3 legs up in a tight channel. It is therefore a parabolic wedge buy climax. The bulls typically become exhausted and the rally evolves into a trading range. That is therefore likely today.
Since the daily chart has a credible bull trend reversal, day traders know that the probability favors higher prices over the next week. They therefore will be more aggressive in their buying than selling. Consequently, they will focus on finding buy setups and they will be more willing to swing trade.
The bears should not sell until the rally begins to go sideways. That should happen over the next 2 hours. In addition, their 1st shorts will be scalps because the strong rally is unlikely to reverse into a strong selloff on the 5-minute chart today.