– Yesterday was a big bear day, and it broke below the Jan. 28 low. However, it closed far above that low.
– The bears hope that it will lead to a 400-pip measured move down, based on the height of the four-month trading range. They need consecutive bear bars closing below the Jan. 28 low before traders will believe that the bear breakout will be successful.
– The bulls want yesterday’s breakout to fail. They want today to continue to be a bull bar, and they want it to close near its high. It would then will be a buy signal bar for a lower low double bottom.
– They then want a break above the four-month range and a 400-pip measured move up. But they need consecutive bull bars closing above the Feb. 10 high to convince traders that the bull breakout will succeed.
– Which is more likely? Until there is a breakout with strong follow-through, the odds favor that breakout attempts up and down will fail and the four-month trading range will continue.
– However, because EUR/USD has been in a trading range for seven years and the current leg down has lasted an unusually long time, traders should expect a rally lasting at least a couple months before EUR/USD trades much lower.
– If there is a bear breakout, the bulls will make another attempt at a bottom around the March 2020 low. That would be a higher low double bottom in the seven-year range, and the current range would then be a likely Final Bear Flag.
