- The EUR/USD now has a three-bar bear micro channel after forming a wedge top at an important measured move projection (Purple Line).
- The bulls have a High one buy signal bar (yesterday). However, the signal bar is a doji, and the odds favor a second leg down. This increases the risk of sellers above yesterday’s high.
- The bulls want the slight pullback bull trend to continue up. However, the odds are that the market will get a pullback back to the moving average (blue line).
- At a minimum, traders will expect a pullback to the low of the Dec. 13 breakout. This is the start of the last leg up in the wedge. However, it is possible that the leg began on Dec. 7, so the market may have to reach the Dec. 7 low.
- Overall, the rally over the past month is the first upset the break out of a tight bear channel on the higher time frames. This means the market will likely have a deep pullback to at least the Nov. 21 price level, creating a higher low major trend reversal. However, this could take several weeks, so traders should expect sideways on the daily chart for now.
EUR/USD: Bulls Want Trend to Continue Up, but Second Leg Down Likely
