- The EURUSD tested the March 20th low yesterday and reversed up.
- The channel down is tight, which increases the probability that the first reversal down will fail.
- The market is developing more buying pressure, increasing the odds of a test of the moving average (blue line).
- Bears were happy to sell below the moving average when the selling pressure was strong. However, most bears will be less interested in selling below the moving average if the selling pressure is strong.
- The bulls know that the bears are becoming less interested in selling at this price level, so they will buy, betting that the market has to get closer to the moving average.
- Since the channel down is tight, any test of the moving average is likely minor at best. This means the market will probably have to test down to this price level even if it reaches the moving average.
- It is reasonable for bears to exit shorts here because of the risk of a buy vacuum test of the moving average.
EUR/USD Bears Want Test of Moving Average
