EUR/USD: Could Be The Start Of The Anticipated Trend Reversal
Al Brooks | Jan 12, 2022 09:34AM ET
The EURUSD forex market is finally beginning to break above the tight trading range that it has been in for the past 8 weeks. I mentioned a few times that it might go sideways to the bear trend line before breaking out. Today, the pair is also beginning to break above the bear trend line.
If today remains a big bull day on the daily chart, then there will be a breakout. The more it closes on its high and the further it closes above the range and the bear trend line, the more likely a 2-month rally to the October or September highs is underway.
Even if today remains a strong bull day, traders will want to see a bull follow-through day tomorrow. If it is also a big bull day, there will be a 60% chance that the breakout will go up for at least a 200-pip measured move.
On the other hand, if we see either today or tomorrow reverse down strongly, traders will conclude that the breakout has failed. They will then look for a breakout below the range. But even if there is a breakout below, it will probably fail and reverse up within a few weeks.
A tight trading range late in a bear trend usually is the Final Bear Flag. Traders should then look for a reversal up that could last 2 or more months.
There has been subtle buying pressure in the tight trading range over the past few weeks. The tiny higher lows and highs slightly increase the chance of a bull breakout.
Remember, I have been saying that there is an increased chance of a trend reversal in early January. This might be it.
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.