- The EUR/USD had a bear signal bar yesterday. One can call it a Low 1 or a Low 2 (double top); it does not matter. What matters is that the signal bar is big and forcing traders to sell in the middle of a 9-bar tight trading range, which is not ideal.
- Yesterday also came within ten pips of the March 28 low. Bulls would have bought the March 28 low during the April 5 selloff and bought more lower, confident they could exit the trade breakeven on first with a profit on their second. Since the market came within ten pips of the March 28 low, it will probably have to close this breakout point.
- The odds favor yesterday’s bear stop entry failing and the market reversing up, which is what it looks like will happen. This may increase the odds of today having a close above the open or at least a weak bear body closing above yesterday’s low.
- Bears hope that yesterday will lead to a successful double top (April 14 & April 21).
- Bears also want a measured move down, breaking below the March – April range and testing the 2020 price levels.
- Bulls want a test back up to the March high and ultimately reach the bear trend line above, which they probably will.
- Today is a Friday, so the weekly chart is important. Few things to note on the Weekly chart:
- Currently, the weekly chart is close to the open of the week (1.0805), which means the open of the week might be a magnet all day as traders fight over a bull or bear close on the weekly chart.
- Since last week broke below the March 11 low (weekly chart), the bulls want this week to have a bull close which would be lousy follow-through for the bears, increasing the odds of a failed breakout below March 11.
- As always, the day session has the potential for a big/surprise move as traders fight over the weekly chart close in the final hours of the day.
EUR/USD: Odds Favor Upward Reversal
