- The EUR/USD bulls got a surprise breakout with follow-through on Jan. 6.
- While the odds favor a second leg up, the problem bulls face is that the breakout is testing the top of a likely trading range.
- This increases the risk that any breakout above the January high will fail, and the market will continue to go sideways.
- The bears want the market to form a double top with Jan. 2; however, the breakout on Jan. 6 is strong enough for the market to get at least a small second leg up.
- The bears will probably wait for a second leg to see what happens above the Jan. 2 high.
- Overall, the market will likely try and form some major trend reversal and continue sideways.
- The odds still favor a 300-pip pullback, so the weekly chart can attempt to form a higher low major trend reversal.
- The selloff since Mid-2021 was tight; therefore, the first reversal up will likely fail on the weekly chart without a pullback and test down, forming a higher low major trend reversal. Traders should expect sideways to down over the next couple of months.
EUR/USD Could Trade Sideways for Several Months
