EUR / USD daily chart and trading strategies
Yesterday broke slightly below March 31 / August. 9 double bottom, but closed on top and it was a perfect doji bar (closed on open and in the middle of the bar). This is a neutral bar and not a strong buy signal bar, especially after Tuesday’s big bear bar.
The bulls want an upside reversal after a failed break below the March low and a corner with the July 21, August 11 and yesterday lows. But the break below the March low so far is also weak. There have been some additional selling today, but so far the pair has moved back to the upper third of the day’s range. If it closes where it is, today it will be an inversion bar with a small body. It would be a second consecutive doji bar, which means more neutrality, despite the downtrend.
Traders are still deciding whether the sell should test the November low, which is the low end of the trading range throughout the year, or reverse higher.
A weak bear breakout and a weak buy signal creates confusion, which usually results in sideways trading for a day or two. Less likely because today could be a big trending day in both directions.
The bears want strong follow-on selling, which would make a test of the November low likely. This is unlikely with a reversal today after an initial sale.
Bulls want a strong bullish reversal, which would make it likely to test the August 13 low in about a week or so.
With yesterday being a doji bar and today so far being a second doji bar, a big bull is unlikely to form. Today’s fight could end at the end of the day. If there is a bullish body, the bigger the body, the more EUR / USD will trade higher tomorrow. Bears want a bear body and the closure below the midpoint. This would increase the chances of at least slightly lower prices tomorrow.
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