- EUR/USD managed to get two bars completely above the 20-period moving average (blue line).
- This was enough to make the market enter a trading range. However, the bears got 22 out of 23 recent closes below the moving average. This is a sign of strong selling, and the market will likely have to enter a trading range before the market can go higher.
- The bears now have a big bear trend bar today. So far, today is enough of a surprise to get at least a small 2nd leg down. However, it forces traders to sell low in a tight trading range. This will likely cause confusion and disappointment as limit order bears who sold yesterday’s close scalp out. Bulls will probably be buyers below the March low, betting they can make at least a scalp.
- If the bears are going to get a strong downside breakout, they need to make today’s close on its low and further trap the bulls. Next, the bears need to get follow-through selling. Otherwise, the market will probably get a small 2nd leg down (after today’s bar) and then continue sideways.
EUR/USD: Surprise Bear Breakout, Expect Another Leg Lower
