- Yesterday was an outside down bar closing below the 12-day trading range and a sign of bulls giving up. The bulls closed the gap above the May 5 breakout point, increasing the odds of more trading range price action.
- EUR/USD bears hope today will have another big bear bar closing on its low, increasing the odds of lower prices. The bears are also hopeful that yesterday is a breakout below the neckline of a double top that will lead to a measured move down the 12-bar tight trading range.
- Bears will probably reach the May 23 low at a minimum. Trading ranges often test the beginning of the breakout, such as May 23, and turn up around the low.
- The market may also test the 50% pullback level, around the May 19 high (1.056), before reversing back up.
- The market is deciding if the bulls will get a higher low following a second leg up above the June high, or if the market has to test the May low before reversing up.
- Right now, the odds favor a higher low, and the bears more selling pressure in the form of consecutive bear bars to increase the odds of lower prices.
- One thing to mention on the monthly chart is that the April close (1.0547) will be a magnet. April was a big bear bar, and May was a disappointment bar for the bears. It is reasonable for the bears who sold the April close to try and exit breakeven or for a small loss after May’s big bull bar. This increases the odds of buyers around the April close (1.0547).
- Today is Friday, so weekly support and resistance are important, especially in the final hour of the week.
- Right now, today is a big bear bar closing on its low (weekly chart). While it is possible that the bulls are unlikely to reach the open of the week before the end of the day, the next reasonable target for the bulls is the low of last week (1.0627).
EUR/USD: Bulls Close Gap Above May 5 Breakout Point
