EUR/USD Forex Higher Low Major Trend Reversal
The EUR/USD daily Forex chart reversed up strongly for 3 days. This is a higher low major trend reversal and a head and shoulders bottom.
Despite the 3 day rally from a higher low major trend reversal bottom, only 40% of major reversal setups lead to strong trends. Therefore, this 3 day rally will probably be minor, which means another leg in the 6 month trading range. It is near a 50% retracement of the 3 week selloff.
Also, I have been saying that the chart would probably enter a trading range between 1.14 and 1.16 for a couple of weeks. The momentum up is strong and therefore the bears will likely need a micro double top before they can create a leg down.
If there is a selloff within a couple of weeks, it probably will reverse up from around this week’s low. That would create a double bottom higher low major trend reversal. It would have a better chance of leading to a breakout above the 6 month trading range.
Overnight EUR/USD Forex trading
The EUR/USD 5 minute Forex chart rallied 80 pips over night. However, it is now around the top of the October 3 sell climax, which is resistance. It is the target I have mentioned several times over the past week. In addition, the day’s range is already big compared to other days on the daily chart. Furthermore, the overnight rally had a series of brief breakouts followed by tight trading ranges. This is a series of buy climaxes. It typically evolves into a trading range. Therefore, the upside from here is probably small today. The overnight bull trend will likely evolve into a 40 – 50 pip trading range soon. Day traders will probably scalp for 10 – 20 pips, betting on reversals.