EUR/USD Trading Strategies: What To Watch Today

The daily chart of the EUR/USD Forex market has broken far above the 18-month bear channel. Since the 3-week rally has had at least 3 surges, it is a parabolic wedge buy climax.

 

EUR/USD Daily Chart

That typically attracts profit-taking, but there is no top yet. Traders will buy the 1st pullback. But after such an extreme buy climax, the next leg up might only last a day or two. Traders should expect some sustained profit taking for a week or two beginning this week.

As I wrote over the weekend, the 2-year bear trend has probably ended. The EURUSD rally might be the resumption of the 2017 bull trend.

However, the 2-year bear trend was a Spike and Channel pattern. There is typically a rally that tests the start of the bear channel and then the chart evolves into a trading range. That is what is likely here. The EURUSD Forex market will probably be in a trading range from 1.08 to 1.18 for the next year.

Overnight {{0|EUR/USD} Forex trading

The 5-minute chart of the {{0|EUR/USD} Forex market has been sideways overnight. There is a triangle on the 60-minute chart.

A triangle in a strong bull trend is a bull flag. But it is also a good candidate for the Final Bull Flag.

If there is a bear breakout, a 1 – 2-week pullback will probably begin. If instead there is a bull breakout, it will probably fail within a few days. The {{0|EUR/USD} will then typically get drawn back to the triangle. It will then probably trade sideways to down for a couple of weeks.

Since it has been in a triangle overnight, day traders are buying low, selling high, and scalping. The legs are big and scalps have been 20 – 40 pips. If the {{0|EUR/USD} continues sideways, the move will get smaller.A triangle is a Breakout Mode pattern. There is, therefore, an increased chance of a breakout up or down and then a trend day.

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