– EUR/USD bears were able to disappoint the bulls and get a big bear bar closing on its low for the wedge top. This is not what the bulls want after two strong bull breakout bars.
– The bulls that bought yesterday’s close are trapped and will probably exit below yesterday’s low.
– While the market may get a second leg up from the two-bar bull breakout before it reaches the March 28 low, there is likely too much risk of a downside bear breakout for bulls to hold long below this bar.
– The bulls will likely step aside here and see how strong the bears are. This is similar to March 21, when the bulls gave the bears a chance; however, the bears were not strong enough to get a strong breakout, and the bulls bought again aggressively on March 29.
– The bulls still hope the market is in a bull channel, so some bulls will buy here, trying to create another higher low and a bull breakout of the wedge bear flag.
– The bears have a credible wedge top now, so if the bulls break above it, there is a 50% chance the bull gets a measured move up.
– Overall, selling below yesterday’s low is a low probability trade for the bears. However, yesterday was not what the bulls wanted to see and increased the odds of more sideways to down.
– Another thing to think about is that this may be the early stage of a bull trend that lasts for several months. This means that early trends typically try and trap traders out of the market to force them to chase the market up. For example: If a bull bought anywhere, they must now decide if they should get out below yesterday’s bar and risk missing an upside bull breakout.
