EUR/USD Parabolic Wedge Sell Climax
EUR/USD parabolic wedge sell climax
EUR/USD Daily Chart
The EUR/USD daily forex chart has had 3 pushes down in a tight bear channel over the past week. This is a parabolic wedge sell climax. The odds therefore favor a bounce to the March 1 low over the next couple of weeks.
The EUR/USD daily forex chart broke strongly below a 4 month trading range. It is now pulling back below the September 8 high. That was the breakout point of the January rally.
Because the selloff over the past 6 days has 3 legs in a tight bear channel, it is a parabolic wedge. That is a sell climax. The odds are that it will lead to a test to near the March 1 low over the next couple of weeks.
Since the selloff on the daily chart is in a tight bear channel, the 1st reversal up will likely be minor. This is true even if it reaches the April 6 low. The odds are that it will fail and the selloff will at least test the current low.
The weekly chart is still in a bull trend. It is now below its 20 week EMA, which is support. That is an additional reason why the selling will probably pause soon.
The next major support is the January 9 low of 1.1915. The odds are that this selloff will get there, even if it first bounces 150 – 200 pips over the next few weeks.
Overnight EUR/USD forex trading
The EUR/USD 5 minute Forex chart sold off 60 pips overnight. Since there were many small reversals over the past 5 hours, the bulls are beginning to buy with limit orders at new lows. They are scalping. In addition, the bears are now taking profits at new lows and selling rallies. This is a sign that the 5 minute chart will probably evolve into a trading range today or tomorrow.
Since the daily chart is in a parabolic wedge sell climax, the 5 minute chart will probably rally 100 – 150 pips over the next week. Therefore, if there is a clear bottom or strong reversal on the 5 minute chart, the bulls will be willing to hold for a 50 pip swing trade on the 5 minute chart.
However, the bear trend on the daily chart is strong. The bears will therefore sell rallies to prior lower highs on the 240 minute chart. The most recent one is yesterday’s high just below 1.2140.
But, the bulls need a strong bottom or a strong reversal up. Without that, the bears will sell every 30 pip bounce and the bulls will only scalp for 10 pips.