EUR/USD bulls had a strong rally during the overnight session. The market is now above the May 12 high and back into the 10-bar tight trading range.
As I said in the prior blog post, the odds favored a failed bear breakout below the 10-bar tight trading range, which is what is happening right now.
The reversal up is setting up a final flag on the daily chart, and the bulls hope this will give them enough energy to break above the May 5 high.
The next target for the bulls would be the bottom of the March – April trading range.
Bulls have a breakout just under the 20-bar exponential moving average, which will be resistance.
Traders will pay close attention to how today’s bar closes. Will it close as a strong bull bar closing near its high, or will it have a big tail on top, indicating selling into the close.
If today closes on a high, traders will be eager to see if tomorrow is a strong follow-through bar as well. This would increase the odds of the market becoming always in long and increase the probability of higher prices.
Overall, today will be an important bar for the bulls and bears.
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