Market Overview: EURUSD Forex
The EURUSD Forex broke below the tight trading range with EURUSD bear breakout test of the 2017 low. Bears want a strong break below 2017 followed by a measured move based on the height of the 7-year trading range. Bulls hope for a 2-legged sideways to up pullback to begin soon from a parabolic wedge and a trend channel line overshoot.
EURUSD Forex market
The Weekly EURUSD chart

- This week’s candlestick on the weekly EURUSD Forex chart was a bear bar with prominent tails above and below.
- Last week, we said that if there is a breakout, a downside breakout is slightly more likely with 2017 low close enough to be a magnet below.
- This week, the EURUSD reached the measured move 1.4268 and just a few pips above the 2017 low. It was a bear breakout below last week’s inside doji.
- The bears want a strong break below 2017 low and a measured move down based on the height of the 7-year trading range.
- If the bears get a few closes below the 2017 low, odds will swing in favor of a bear breakout.
- The bulls hope that this is simply a sell vacuum test of the 7-year trading range low. They see a parabolic wedge (August 20, November 24, May 13) and a trend channel line overshoot.
- Last week was an inside doji bar. The bulls hope that it is a one bar final flag of the move. They want a reversal higher after a breakout below the potential final flag.
- Al has said that the market has been in a trading range for seven years. It is now near the bottom of the range. Reversals are more likely than breakouts.
- Therefore, as strong as the selloff has been, it is still more likely a bear leg in the seven-year trading range than a resumption of the 15-year bear trend.
- Al also said that a couple of closes below the 2017 low would probably be the start of a measured move down based on the height of the seven-year trading range. This remains true.
- The sell-off since March 31 has been in a tight bear channel with big bear bars closing near the low. The bulls were only able to create doji bars on the way down.
- That means strong bears. Odds continue to favor sideways to down.
- However, the current selloff is climactic. Because of the market context (parabolic wedge, trend channel line overshoot), traders should be prepared for a 2-legged pullback (bounce) which can begin at any moment.
- Any pullback would likely only be minor. The selloff is strong enough for traders to expect at least a small second leg sideways to down after a pullback.
The Daily EURUSD chart

- The EURUSD traded sideways in the first half of the week followed by a break below the tight trading range to test the measured move and 2017 low on Thursday and Friday.
- Friday traded below Thursday’s big breakout bar but reversed to close as a bull bar.
- Last week, we said that odds slightly favor sideways to down. Bears want a strong break below April 28 low and follow-through selling to reach the next measured move and the 2017 low. They got that this week.
- The bulls hope that this was a sell vacuum test of the 2017 low. They want a reversal higher from a trend channel line overshoot and a parabolic wedge (April 14, April 28, and May 13).
- They hope that the tight trading range in the last two weeks is the final flag of the move. They want a reversal higher after a failed breakout below.
- The bears want a strong break below 2017 low and a measured move down based on the height of the 7-year trading range.
- Friday was a small bull bar closing near the high. The bears did not get a follow-through bear bar to confirm the breakout below the 10-day tight trading range.
- The bears hope that Friday was simply a small pullback to be followed by another leg lower and breakout attempt below the 2017 low.
- The sell-off since March 31 is in a tight bear channel. The bulls have not been able to create consecutive bull bars closing near the high. It means the bears are strong.
- However, the selling has been climactic. The parabolic wedge and trend channel overshoot increase the odds of a minor pullback before a strong break below the 2017 low.
- We have said that because of the market context, traders should be prepared for a 2-legged minor pullback which can begin at any moment.
- It may begin after a failed breakout below the final flag around the 2017 low. This remains true.
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