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EURUSD 9 Consecutive Bear Bars

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Market Overview: EURUSD Forex

The weekly chart formed a EURUSD 9 consecutive bear bars with many candlesticks closing near their lows. That means strong bears. The odds continue to slightly favor sideways to down. However, the move down has lasted a long time and is slightly climactic. A minor pullback can begin within a few weeks. Any pullback would likely be minor and favor at least a small second leg sideways to down.

EURUSD Forex market

The Weekly EURUSD chart

EURUSD Weekly: Tight Bear Channel, Parabolic Wedge EURUSD 9 Consecutive Bear Bars
  • This week’s candlestick on the weekly EURUSD Forex chart was a bear bar closing in the lower half of its range.
  • Last week, we said that odds slightly favor the market to trade at least a little lower and traders will see if the bears can create a breakout below the May & March low or reverse slightly higher instead.
  • This week tested the May low but closed above it with a small tail below.
  • The bears got a reversal from a wedge top (Feb 2, Apr 26, and Jul 18), a trend channel line overshoot and a higher high major trend reversal.
  • The move down is in a tight bear channel consisting of 9 consecutive bear bars. 
  • That increases the odds of at least a small second leg sideways to down after a pullback.
  • If there is a pullback (bounce), the bears want it to be weak (overlapping bars, doji(s), bear bars) and sideways, followed by another leg down from a lower high major trend reversal.
  • The bulls hope that the current leg down is simply a deep pullback and want a reversal up from a double bottom bull flag (May 31).
  • They see the market as still being in a broad bull channel and want the bull trend line to act as support.
  • They want a reversal up from a wedge bull flag (Mar 15, May 31 and Sept 14) around May or March low.
  • They also see a parabolic wedge (Aug 3, Aug 25, and Sept 14).
  • The problem with the bull’s case is that the move down is very strong. They will need a strong bull reversal bar or at least a micro double bottom before they would think to buy more aggressively.
  • While it is sitting at a potential support area (bull trend line), the bulls still need to do more to prove that they are at least temporarily back in control. They have not yet been able to do so.
  • Since this week was a bear bar closing in the lower of the candlestick, it is a sell signal bar for next week.
  • The EURUSD continue to slightly favor sideways to down. 
  • However, the move down has lasted a long time and is slightly climactic. A minor pullback can begin within a few weeks. 
  • Any pullback would likely be minor and favor at least a small second leg sideways to down.
  • Traders will see if the bears can create a breakout below the May & March low, or will the market begin the minor pullback phase.
  • If the bears continue to create strong consecutive bear bars breaking far below the May & March low, it will increase the odds of the reversal being successful.

The Daily EURUSD chart

EURUSD Daily: 3rd Leg Down, Slightly Climactic
  • The EURUSD traded sideways to down for the week. Thursday tested May low, but there was no follow-through selling on Friday.
  • Last week, we said that odds slightly favor the market to trade at least a little lower and traders will see if the bears can create a breakout below the bull trend line and the May & March low, or will the market find buyers there?
  • The bears got a reversal from a trend channel line overshoot, a wedge top (Feb 2, Apr 26, and Jul 18) and a higher high major trend reversal.
  • They want a strong breakout below the bull trend line and the March low. 
  • The move down since July 18 is in a tight bear channel. That increases the odds of at least a small second leg sideways to down after a larger pullback.
  • If there is a larger pullback (bounce), the bears want a reversal down from a lower high major trend reversal.
  • The bulls hope that the recent move down is simply a deep pullback.
  • They want at least a minor pullback from a parabolic wedge (Aug 8, Aug 25, and Sept 14) and a retest of the prior leg extreme high (July 18). 
  • They want the market to stall around the bull trend line area and reverse up.
  • As strong as the selloff has been, the bulls hope that it is simply a sell vacuum and a bear leg within a trading range.
  • Because of the strong move down, the bulls will need to create consecutive bull bars closing near their highs (bull spike) breaking far above the minor bear trend line (drawn from Jul 18 high) to increase the odds of higher prices.
  • The bulls hope that Thursday was a breakout from what could be the final flag of the leg down and want the minor pullback to begin soon.
  • While the odds continue to slightly favor the market to trade at least a little lower, the move down has lasted a long time and is slightly climactic.
  • A minor pullback can begin within a few weeks. If a pullback (bounce) begins, traders will see the strength of the pullback. 
  • If it is weak (overlapping bars, doji(s), bear bars) and sideways, the odds of another leg down increase.
  • Traders will see if the bears can create a breakout below the bull trend line and the May & March low, or will the market find buyers around the current levels beginning the minor pullback phase.

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