- EUR/USD bears want a successful breakout and then a 400-pip measured move down to near last year’s low.
- They need consecutive bear bars closing below the January 28 low before traders will believe that a successful breakout has begun. Closes far below would be more convincing.
- Yesterday was a big bear day, but its close was 2 pips above that low.
- While that might seem insignificant, it is important. That means if today closes below the January 24 low, there would be consecutive bear days breaking below the low, but only one close below the low. Many traders will buy the close, betting that tomorrow will reverse up from a failed breakout attempt.
- Bulls need a strong reversal up within the next week or so. They then want a breakout above the February 10 high and a 400-pip measured move up.
- When there is both a double top and a double bottom like there is now (January 14/February 10 and January 28/today), the chart is in Breakout Mode. That means there is about a 50% chance of a successful bull breakout and about a 50% chance of a successful bear breakout.
- Bulls have been trying for several days to get a reversal up but have been failing. Therefore, the odds of a bear breakout are slightly higher.
- However, one or two big bull days would make a successful bull breakout slightly more likely. I say “slightly” because it is accurate. Until there is a successful breakout, the probability is never much more than 50%, even though it might appear that it is.
EUR/USD Stalls At January low
