The Forex market on the daily chart is turning down from a buy climax. Traders expect a minimum of 2 legs sideways to down. In addition, they believe the selloff will reach the EMA and the bottom of the final 2 day buy climax, which is 1.1167.
Last week is a weak sell signal bar on the weekly chart. This week will probably trade below last week’s low to trigger the minor sell signal. However, because the reversal down will probably be minor, there might be more buyers than sellers below last week’s low. Remember, traders are expecting at least 2 legs down. They, therefore, expect at least one brief rally along the way.
The bulls want a double bottom bull flag with the June 9 low and a resumption of the bull trend this week. Most traders expect at least a small 2nd leg sideways to down. They will, therefore, sell the 1st bounce.
There is only a 30% chance of a rally this week that goes above last week’s high without at least a 2nd leg sideways to down.
Overnight EUR/USD Forex trading
The 5 minute chart of the EUR/USD Forex market has been in a 40 pip trading range overnight. Day traders are looking for 10 – 20 pip scalps up or down. They know that 2 legs sideways to down are likely. Therefore, they expect a bounce for a day or two this week. But they will sell the rally, expecting a test of the June 3 low.
Any day can suddenly break into a trend. But the bulls will probably need a buy signal bar on the daily chart before the 5 minute chart can have a trend up. That reduces the chance of a bull trend day today.
Last week is a weak sell signal bar on the weekly chart. There will probably be buyers below its low. That reduces the chance of a strong selloff from here.
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