EUR/USD: Tight Trading Range

2022.05.11 16:31

EUR/USD Daily Chart

• The EUR/USD has been in a 10-bar tight trading range on the daily chart. This is a triangle on a smaller time frame. This is a breakout mode situation, and the probability is close to 50% for the breakout up or down.
• Bears want a second leg down from the April 21 selloff.
• Bulls see the 10-bar tight trading range as a final flag and want an upside breakout that would test the April 25 high and the bottom of the March—April trading range.
• The Market is deciding if the April 21 bear breakout will lead to a measuring gap or exhaustion gap.
• The odds favor an exhaustion gap and the market ultimately testing the April 21 high. However, the market may get a small second leg down first. If the market does get a second leg down, the 10-bar tight trading range would be a final flag.
• Overall, the market will probably break to the upside soon and reach the March—April lows. The lower probability outcome would be the April 25 bear breakout leading to a measuring gap and testing the 2017 low.

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