- The EUR/USD is continuing to go sideways near the May 31st low.
- The bears see the tight trading range as a bear flag that will lead to a test of the May 31st low.
- The bulls want a bull breakout of the tight trading range and a test of the moving average.
- In general, tight trading ranges are low-probability environments for stop entries. This means the probability of a breakout up or down is nearly 50%.
- The market is in between the middle of two important magnets, the May 31st low and the moving average. The most important thing to realize here is that the market is neutral, and it is better to wait for a breakout up or down of the tight trading range.
- Even if the bulls get an upside breakout of the range, traders might be suspicious of the breakout. The daily chart has been in a tight trading range for some time, and the May 31st low is an obvious magnet. This means that the odds favor price falling below it and reversing up.
- If the market falls below the May 31st low, bulls will see the tight trading range over the past couple of days as a final flag.
EUR/USD: Possible Bear Flag, Test of May 31st
