The weekly EURUSD chart is forming a wedge bottom and traders are buying low. Day traders are more willing to look to buy, especially strong reversals up. There were several scalps up and down on the 5 minute chart today.
I have had many requests to post Forex scalps, and am doing so today. On the weekly and daily charts, bears have stopped selling below bars and are instead buying back shorts below bars. This means they are not confident of much more down near term. Bulls are beginning to buy new lows for scalps up. Since both bulls and bears are buying low, a trading range is likely soon. The wedge bottom might lead to two legs and 10 bars up on the weekly chart.
Today’s 5 minute chart sold off, but quickly reversed up. This was the dominant feature of the first half of the day and it made traders look for reasons to buy. Although they could buy at the market at any time during or for many bars after the reversal, the ii (inside, inside bars) immediately after the reversal was a good stop entry buy setup. Traders bought 1 pip above the bull signal bar and put a stop below the low of the bar, risking about 20 pips. Since this was a high probability trade, it was mathematically acceptable to go for a reward equal to the initial risk, or 20 pips.
The channel up had bear bars after every bull bar. This made the rally more likely a bull leg in what would become a trading range than a bull leg in a bull trend. Traders were looking for reasons to short. There was a 2 bar bear breakout with decent size bodies and closes on the lows. This made a pullback of a about 10 bars and two legs (or more) likely. Bears shorted above bars or on the close of a bear bar, expecting more down. Depending on which entry a bear chose, the initial risk was from 20 to 30 pips, but the actual risk was only about 5 pips. The bears could then scalp out with 10 to 20 pips. If they held for a swing down, they could have made more than 50 pips.
