EUR/USD Daily Chart.
– EUR/USD tested the May 5 breakout point yesterday, and so far, the gap (May 5 high) is still open (negative gap). The bulls hope they will be able to get a measure more up from the May 13 low to the May 5 high, projecting up to April 21 high.
– The bears are still hoping that May 23 and 24 are part of a second leg trap. However, the bears have had two chances to reverse the market down (May 25 and June 1). At the moment, if today closes near its high, the bears may give up, and the market could break above the May 31 high, triggering last month’s buy signal bar.
– The issue is deciding if today will be a higher low major trend reversal.
– So far, the market has had around a 33% pullback from the May 31 high.
– The problem the bulls have is that higher low major trend reversals have deeper pullbacks than 33%, so this may make traders question if this is a valid higher low major trend reversal.
– It is possible the market goes straight up here. However, the bulls will likely need a more credible double bottom (this would form a significant trend reversal to get a sustainable bull trend.
– It is possible that the bulls rally up to the April 21 high and have a deep pullback forming a higher low major trend reversal. That would create a larger two-legged minor reversal that could form a deep pullback and form a higher low major trend reversal.
– The bears are still hoping that any rally will stay below the April 21 high or the March 31 high, and the market will continue in a bear channel. However, I think that is unlikely.