- The EUR/USD is forming a tight trading range, which puts the market in breakout mode, just above the moving average.
- The market will probably get at least a small second leg down to the moving average.
- Dec. 12 is the bottom of the most recent leg up.
- The channel is beginning to form a clear wedge top at an obvious resistance level from the measured move-up (Purple line) based on the Nov. 10 and 11 bull breakout.
- While the market is in a tight bull channel which is a dangerous environment to look for shorts, the market is climactic and has been away from the moving average for over 29 bars, which is extreme.
- Overall, the {{|EUR/USD}} is likely to pull back for a couple of legs at a minimum and get down to the moving average.
- The rally up to the December high is the first trendline breakout of the tight bear channel on the weekly chart. This increases the odds that this rally will have a deep pullback below the Nov. 21 low, forming a higher lower major trend reversal on the weekly chart.
EUR/USD Trades in Tight Range, Breakout Likely
