EUR/USD: Bad Follow-Through After Sell Climax

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EUR/USD Daily Chart

• The EUR/USD formed a sell climax last week and went below the May 31st low.
• While the bears have done a good job getting to the May 31st low, the market is forming consecutive sell climaxes. This will increase the odds of a pullback and possible test of the moving average.
• some bears sold the September 14th breakout and were disappointed by the bad follow-through. They may look to buy back shorts at their original entry, the September 14th close.
• The bears hope they can break far below the May 31st low. However, the bears will likely be disappointed, and the market will test the moving average soon.
• Since the September 14th bear breakout is a possible exhaustion bar, the bulls will want a test of the bar’s high.

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