EUR/USD: Low 2 Short at Bottom of Trading Range Increases Likelihood of Bull Break

Published at: Mar 04, 2023

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EUR/USD

+0.38%

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EUR/USD Daily Chart

• EUR/USD formed a bear bar yesterday following Wednesday’s outside up bar. This is a Low 2 short. However, the location is bad. It is at the bottom of a likely trading range.
• Low 2 shorts at the bottom of a trading range are lower probability. This increases the odds of a failed Low 2, a bull breakout of the bear flag, and a measured move up of the recent four-day range.
• If the bulls get a measured move up in the past four days, the target would be around the Feb. 2 bears signal bar low.
• Since the market is in a likely trading range, this is a reasonable target. Most breakout points close in trading ranges, which means bulls buying the Feb. 2 low and scaling in lower will probably make money.
• Overall, traders should expect yesterday’s Low 2 to have bad follow-through. The lower probability outcome would be a strong bear follow-through today and a breakout below the Jan. 6 low.

 

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