After 2 weeks of rallying, Monday and Tuesday price movement suggests that the party might just be over. This definitely appears to be the case if we inspect the daily chart where
- no bullish reversal pattern has appeared
- resistance has been met
However bulls might not have given up whereas bears might not dare to be totally assertive. Let’s see why.
When we switch to the 4-hour chart, a number of observations can be made:
- Weeks 23 and 24 are positive weeks with higher highs and higher lows made. Week 24 closed with gains from the week’s open.
- A bearish reversal could be considered with certainty only if this week closes negatively and below the low of last week (24). Such a condition has not revealed itself.
- Therefore Bulls upon discovering a strong support will show themselves. It might show today because price is supported at yesterday’s low.
- On the other hand, we noticed that most days in week 23 and 24 closed with positive gains leading to the overall weekly gains. Monday and Tuesday this week has already turned out to be big losers. Bears are encouraged by this. They are also encouraged by the regret shown on Monday (bull trap)
- Late bears who has not joined yet would be afraid because of the steep down. Therefore a good short will only come after retracement. This could be anyway from Tuesday high to last Friday (18 June) high or the high on Monday (21 June).
Bull and bear story in EURUSD
Summary:
- Because of the price failure on Monday (21 June), bears have a case to make for bearish reversal. This is supported by the daily chart.
- Bull won’t give up yet because they have reasons to buy at support based on momentum, support and resistance levels in the past 2 weeks.
- The next two-three days will be interesting for the daytrader. The objective of the game? See if support or resistance is stronger and who is more motivated. Just don’t make up your mind yet.
Support and resistance for EURUSD; essential rules for trading the FX market
