- The EUR/USD is trying to form a bottom after the failed breakout last week below the January low.
- The odds are that the market will bounce soon and try for a test of the February highs.
- One problem for bulls is how tight this bear channel has been since the high of February.
- While the selloff looks like a leg in a trading range and Bears have had bad follow-through, stop entries have not worked for bulls.
- I bring up the tight channel because while it is not likely, this is a double top, and bears are hopeful they will get bear breakout below January and measured move down. The probability is low, but it can easily be 35-40%.
- Traders need to be aware of the least likely outcome: a bear breakout and measured move down.
- Remember, the market is in a trading range, which means there is a bull and bear case, and the probability of either has to be closer to 50% than it may appear. Otherwise, the market would not be in a trading range. It would be trending.
- Bulls see yesterday as an inside bar, and a stop entry buy. Bulls will want today to trigger the stop entry buy and close as a strong entry bar.
- While the odds favor a rally testing back up to the February highs, Bulls’ probability is not yet high. Bulls need consecutive strong bull bars to convince traders we are going higher, such as January 31 – February 2.
- Currently, the market is testing around 50% of yesterday’s range so that bulls may buy here. Often when you have a big signal bar, such as yesterday, traders try and buy a 50% retracement of bar.
- Overall, the market is in a trading range, and it is low in the range, so traders will expect a bounce up soon to test back into the middle of the trading range.
EUR/USD: Bears Trying To Prevent Yesterday’s Buy Signal From Triggering
