![\"EURUSD](\"https:\/\/www.brookstradingcourse.com\/wp-content\/uploads\/2016\/09\/EC-11.png\" "\\"\\"")
<\/a><\/p>\nThe 60 minute chart of the EURUSD Forex market is turning down from a Head and Shoulders Top (HST). Because most reversals fail, the pullback back up has been strong, and the bears reached their minimum goal of 2 legs down from the high, the odds are that the EURUSD will form a trading range. Whenever there is a reasonable argument for both the bulls and bears, as there is here, the odds are that the market is balanced and it will go sideways. <\/p>\n
While the EURUSD has nested head and shoulders tops, a head and shoulders top is a trading range. Bulls see it as a triangle or some other type of bull flag. Only 40% of major bear reversals lead to bear trends. Because tops are usually trading ranges, it is more likely that the market continues sideways. It would therefore disappoint both the bulls and the bears. However, Friday’s selloff triggered the short. The bears need follow-through today. Yet, the odds still are against the conversion of the trading range into a bear trend on the 240 minute chart.<\/p>\n
Stock market selloff<\/h3>\n
Friday’s big selloff in the US stock market did not have a significant effect on the EURUSD on Friday. If the stock market continues to selloff, it will affect all financial markets. Yet, it is impossible to know if the result will be a bull or bear trend. Traders should therefore simply trade what is in front of them.<\/p>\n
Because the stock market selloff is probably just a bear leg in a bull flag on the weekly chart, Forex traders do not yet see it as significant.<\/p>\n
EURUSD overnight Forex session<\/h3>\n
The EURUSD overnight traded mostly sideways and within Friday’s range. This is what most commonly happens as a reversal begins to form. Most reversals end up as continuation patterns, not opposite trends.<\/p>\n
While there was a 50 pip selloff overnight, the EURUSD has been in a 20 pip range since. The selloff will probably end up as a sell vacuum test of the bottom of the 4 day range. Until there is a strong breakout of the range, Forex day traders will scalp, as they do on most days.<\/p>\n
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Summary of today’s S&P Emini futures price action and what to expect tomorrow<\/h2>\n
The Emini reversed up strongly today after Friday’s sell climax.<\/p>\n The Emini reversed most of Friday’s selling today. While it has had many similar reversals after strong bear breakouts over the past 2 years, most have evolved into trading ranges. With the FOMC meeting next week, the odds are that the bulls will be disappointed by a lack of follow-through buying tomorrow. I have said that bulls would buy the selloff. Yet, the selloff was very big, just like the reversal up. Big Down, Big Up creates Big Confusion. Confusion is a hallmark of a trading range. Hence, the odds are that the Emini will be sideways for the rest of the week.<\/p>\n While the bulls want strong follow-though buying tomorrow, today was a buy climax. That means that the bulls have only a 25% chance of a strong bull trend tomorrow. However, they have a 50% chance of some follow-through buying in the 1st 2 hours. Finally, there is a 50% chance of at least a couple of hours of sideways to down trading beginning by the end of the 2nd hour.<\/p>\n <\/p>\n See the weekly update<\/a> for a discussion of the price action on the weekly candlestick chart and for what to expect going into next week.<\/p>\n Traders can see the end of the day bar-by-bar price action report by signing up<\/a> for free at BrooksPriceAction.com. I talk about the detailed S&P Emini futures price action real-time throughout the day in the BrooksPriceAction.com trading room<\/a>. We offer a 2 day free trial<\/a>.<\/p>\n<\/a><\/p>\n
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