EUR/USD: DB Bull Flag, Strong Breakout Probable

EUR/USD has been turning up from the 4-day micro wedge and double bottom bull flag (with Apr. 22 low). After consecutive wedge tops, we should get a 2nd leg sideways to down, and it should start within a few days. Traders expect a double top bear flag with the May 3 high, or a double top with the Apr. 29 high.

If bulls get a breakout above the Apr. 29 high, which would still be in the 9-month trading range, it should continue for at least a couple more months.

Traders will look for a reversal down from the wedge top (1st of 2 legs up were at the Mar. 18 high and Apr. 29 highs), which would be a double top with the Feb. 25 high.

The 2-day reversal up should reach the May 3 high. Traders will then decide between a double top bear flag, or continuing up to the Apr. 29 or Feb. 25 high.

EUR/USD Daily Chart

• Strong breakout to far above yesterdays high. Should reach magnet of May 3 high today or tomorrow.

• Overnight bull trend has been strong so day traders have only been buying.

• Near top of 4-day trading range, so bulls will start to take profits. Overnight rally should then evolve into trading range.

• Once there has been 20-pip pullback, day traders will expect a trading range, and they will begin to sell for scalps.

• Even if there is a trading range, the odds of a resumption up will be greater than of a reversal down, so easier to make money buying reversals up from bottom of range, than selling reversals down.

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