EUR/USD Testing July Wedge Bottom
EUR/USD Daily Chart.
– Wednesday was an outside down day at the resistance of the July 6 high. It could be the start of a reversal down from a double top bear flag.
– Yesterday was a small day, but it had a bear body. Even thought the bear body was small, a bear body was the minimum needed to confirm Wednesday’s reversal down. A confirmed bear breakout is likely to have at least slightly lower prices.
– Today, so far, is a big bear day just after the jobs report.
– Since the July 21 low was a sell climax, traders expect a second leg up from a higher low. Therefore, the current selloff should reverse up from above that low. There is sometimes a double bottom after a reversal up from a wedge bottom.
– Because the EUR/USD is near the bottom of a year-long trading range and most trading range breakouts fail, traders expect a reversal up soon back to the middle of the range.
– That middle area is also around the June 25 major lower high, which was the start of the month-long bear channel and, therefore, an important magnet.
– The July low is the neckline of the July 7/July 30 double top bear flag. A 150-pip measured move down would be a test of the November bottom of the yearlong trading range at 1.16.
– The bears need a strong break below the November low before traders will look for much lower prices.
– Since most breakout attempts fail, there should be more buyers than sellers below that low and below the July low. Consequently, the EUR/USD should begin a move back up to the June 25 high at around 1.20 before going much lower.
Last Day Of Week, So Weekly Support And Resistance Can Be Important Today
– Today is the last day of the week. Weekly support and resistance can be magnets, especially in the final hour.
– This week so far is a bear bar closing near its low.
– Its high and low are within last week’s range, so this week so far is an inside bar. It is, therefore, both a buy and sell signal bar for next week.
– It is a Low 1 sell signal bar after a 9-bar bear micro channel.
– The more the week closes on its low, the more likely next week will trade below this week’s low.
o However, because the EURUSD is near the bottom of a yearlong trading range, it probably will have a difficult time falling much below 1.16 at the bottom of the range.