- The EUR/USD found buyers early this morning. The market will probably rally closer to the moving average (blue line) over the next few days.
- The tight bear channel that began in early May has probably evolved into a trading range. Most traders do not want to sell too low if the market is in a trading range. This makes the moving average a good measurement of what is considered “too low.”
- Since the moving average represents what is considered an average price or a fair price, this means that the bears selling here are selling below the fair price, a discounted price. Since a trading range is typically a neutral environment, the market will probably have to test closer to the moving average to attract more sellers.
- The bulls know this and are buying, betting that the market will need to test closer to the moving average.
- The bulls have done an excellent job getting the market to go sideways. Next, the bulls need to show further signs of strength. One way they could do that is to get consecutive trend bars closing on their highs, preferably above the moving average.
- Until the bulls get further signs of strength, traders will assume any reversal up is likely minor.
EUR/USD Likely to Close at Moving Average Soon
