- The EUR/USD had a strong buy signal bar on May 2nd that rallied to the April 26th high. However, the market came within three pips of the April 26th high and failed.
- The bears who sold above the May 2nd high made money, a sign that the market is evolving into a trading range.
- I have been saying for some time that the bears need to get closes below the moving average (blue line) to convince traders that the market is evolving into a trading.
- In general, when the market has several bodies entirely above the moving average, it is better only to look to buy until there are closes below the moving average.
- The bulls formed a channel that began on Mach 24th. Channels typically evolve into trading ranges, which means the odds favor a test down to prior lower highs, such as the April 10th high.
- The bulls want the channel up to continue; however, typically, there is a 75% chance that channels will evolve into trading ranges. This means only a 25% chance that the bull channel will get a bull breakout and reset the market cycle.