EUR/USD: More Sideways Price Action
2022.10.10 12:00
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The pullback in over the past two days is disappointing for the bulls and increases the odds of more sideways price action.
October 4 was a reasonable buy-the-close bar; the market should test this close soon. Typically, when you buy the close of a good bar and are disappointed (October 5), the market will give you a chance to exit breakeven. This makes me think the market will have to test the October 5 close and that the current selloff is minor.
The bears see October 4 as exhaustion and a second leg trap on a smaller time frame. The problem with this argument is how tight the channel is.
The market will probably have to get up to the September 20 and September 12 highs since this was the start of the exhaustive leg down.
The past two days are enough of a surprise that the market may need a second leg down before the bulls can get a rally up to October 14.
Overall, traders should expect sideways to up over the next few days and a test of the October 4 close. Less likely, the past two trading days start an endless pullback that breaks below the September low.
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