- The EUR/USD is breaking out above the Jan. 2 high.
- As strong as the rally from the Jan. 6 low is, the odds are that there will be sellers above the Jan. 2 high and that the market will go sideways soon, causing the bull’s disappointment.
- The selloff down to the Jan. 6 low is enough to increase the odds of a trading range forming.
- While the bulls may get a measured move up in the past two weeks, more likely, the bulls will be disappointed soon, and the market will continue sideways.
- The bears will likely wait for a second entry short before looking to sell.
- If the bulls are going to be successful in getting a measured move up, they need a strong close above Jan. 2 and strong follow-through. Otherwise, most traders will assume the breakout above Jan. 2 will fail, leading to more sideways trading.
- As I have said, the rally from the October 2022 low is the first trendline break of a very tight bear channel that began in mid-2021 on the weekly chart.
- This means that the reversal up is likely minor, and the bulls will likely need a pullback to form a high-low major trend reversal. The pullback could fall to the December low before buyers are eager to buy.
- Overall, sideways is most likely on the daily chart.
EUR/USD's Upside is Limited
