By Al Brooks
The EUR/USD has been in a tight trading range for over a month. The odds still favor a 2nd leg up on the daily chart after the December 3 bull trend reversal and a wedge bottom, but there is no sign that the rally is about to begin. Now that the trading range has grown to more than 20 bars, the probability for the bulls is beginning to fade. It is still more than 50%, but the bears could easily get a strong bear breakout at any time and then a selloff below the December 3 low.
I have mentioned many times over the past week that the 60-minute chart was likely to go sideways for several days, which it has. The bulls see a wedge bull flag. The bears see last week’s rally as a double top with the December high. With the price action going sideways, neither is swing trading. Both are either waiting or scaling for 20 – 50 pips. Day traders who are trading the 5-minute chart are scalping for 10 – 20 pips and entering a lot with limit orders. Until there is a strong breakout up or down, traders will continue to scalp or wait.
