- The EUR/USD formed a parabolic wedge bottom (green line) at the July 28th low. The bulls are hopeful that the parabolic wedge bottom will lead to a sharp reversal up.
- However, most parabolic wedges should be seen as minor reversals. This is because a parabolic wedge is formed inside a tight channel, and breakouts of tight channels are often minor reversals that lead to sideways trading or resumption of the bear channel.
- Since the market is in a trading range, the bears will probably be disappointed soon. Typically in a trading range, once one side has done something strong, they are often disappointed. The bears have a large outside down bar and a six-bar bear microchannel.
- Overall, traders should expect the trading range price action to continue. However, since the bulls have a parabolic wedge within an overall trading range, it can potentially disappoint the bears and rally for a couple of legs.
EUR/USD Forms a Parabolic Wedge Bottom
