Wall Street closes at a record for the first time since end of January
Friday was an outside up day for EUR/USD, but today so far is only a small doji bar. That is weak follow-through and increases the chance of a pullback for a few days. This is especially true after disappointing follow-through buying after the first 2 days up from the low. If there is a pullback, the EUR/USD will probably test the bottom of the most recent buy climax, which is Friday’s low. That is also around a 50% pullback.
I mentioned on August 20 that the EUR/USD should rally for a couple weeks and have at least a couple small legs up. That is still true, but unless today or tomorrow breaks strongly above the Aug. 13 high, there will probably be a test down for a few days.
The bulls need 2 closes above the Aug. 13 lower high. If they get that, the rally should continue up to the July 30 lower high or the June 25 lower high. Bears want a reversal down from a double top with the Aug. 13 lower high. They probably will not get a strong break below the Aug. 20 low, which is the neckline. There should be buyers below the November low, which is the bottom of the yearlong trading range.
Tomorrow is the final day of August. On the monthly chart, August is a reversal bar because it is now trading above its midpoint. However, it still has a bear body and it is therefore a weak buy signal bar.
The bulls will try to get the month to close on its high. If they succeed, September should trade at least a little above the August high. A rally could continue up to the middle of the yearlong trading range over the next couple months.
