EUR/USD: Bulls Going For Double Bottom

2022.04.08 16:52

EUR/USD Daily Chart

• Today the EUR/USD reached the March 7 close. Bulls hope there will be buyers at this price level (bears buying back shorts, bulls buying to get long), and there likely will be.
• Bulls have a problem: there are six consecutive bear bars on the daily chart, so even if the bulls get a strong bull close today, it will probably lead to a minor reversal at best. The bulls will need a micro double bottom before getting a reversal up.
• Bears hope that the six consecutive bear bars will be enough to entice bears to stay short and bet on a breakout below March 7.
• More likely, the market will go sideways here, and the bulls fight for a double bottom, and the bears fight for a breakout below March 7.
• When the market is in a trading range, things are common not to look right. For example, the bears did a great job getting four consecutive bear bars, with three closing on their lows on April 5; however, instead of racing down to the March 7 low, the market hesitated at important support.
• Bulls are trying to bottom at important support. However, they have the problem of too many bear bars, which will make traders hesitate and potentially wait to buy a second entry.
• Overall, traders should expect a bounce on the daily chart for a day or two. The market has six consecutive bear bars, which means the odds favor a bull close today. The bulls will probably only be able to get a minor reversal and need a second entry to buy to get a credible bottom. 
• Another thing to note is that the March 30 bull close was a reasonable buy, and it never let those buy-the-close traders out. This means the March 30 close will be a magnet, and the market will likely have to get back to the March 30 close, even if it takes two weeks.

Source