EURUSD breaks below 7-year trading range

Market Overview: EURUSD Forex

The EURUSD Forex July candlestick was a big bear bar with a long tail below. It broke below the 7-year trading range low. The long tail below indicates that the bears are not as strong as they could have been. The bears will need to create a consecutive bear bar to confirm the breakout below the 7-year trading range. The selling has been climactic. The trend channel line overshoot and wedge bottom (November 24, May 13 and July 14) increase the odds of at least a small sideways to up pullback (for a couple of weeks) before the EURUSD continue lower. The pullback may have begun in July. 

EURUSD Forex market

The Monthly EURUSD Forex chart

• The July Monthly EURUSD candlestick was a big bear bar with a long tail below. It broke below the 7-year trading range low.
• Last month, we said traders will BLSH (Buy Low, Sell High) until there is a strong breakout from either direction. The bears got the breakout they wanted.
• However, the long tail below indicates that the bears are not as strong as they could have been.
• The bulls want a failed breakout from the 7-year trading range low and a reversal up from a trend channel line overshoot and parabolic wedge (November 24, May 13 and July 14).
• However, the bulls have not been able to create strong consecutive bull bars since the sell-off in 2021.
• The bulls want at least a test of the breakout point, which is the 2017 low.
• Bears want a breakout below the 7-year trading range low followed by a measured move down based on the height of the 7-year trading range which will take them to the year 2000 low.
• The sell-off since June 2021 is in a tight bear channel. That means persistent selling and strong bears. 
• The bears will need to create a consecutive bear bar to confirm the breakout below the 7-year trading range.
• The selling has been climactic. The trend channel line overshoot and wedge bottom (November 24, May 13 and July 14) increase the odds of at least a small sideways to up pullback (for a couple of weeks) before the EURUSD continues lower. The pullback may have begun in July.

The Weekly EURUSD chart

• This week’s candlestick on the weekly EURUSD Forex chart was an inside bull doji. It closed in the upper half of the bar.
• We have said that the odds are the EURUSD is still in the two-legged sideways to up pullback phase. This remains true.
• The bears want a strong breakout below the 2017 low and a measured move down based on the height of the 7-year trading range which will take them to the year 2000 low.
• They got 2 bear bars closing below 2017 low, increasing the odds of a breakout and a measured move down.
• The move down is in a tight bear channel. That means strong bears. Odds slightly favor the EURUSD trading lower after the current pullback.
• The bulls hope that the sell-off since March was a sell vacuum test of the 7-year trading range low. 
• They want a reversal higher from a wedge bottom (Mar 4, May 13 and July 14) and a trend channel line overshoot.
• The bulls hope that the recent 10-week trading range is the final flag of the move down which started in 2021. 
• They want a failed breakout below the 7-year trading range and a test back into the potential 10-week final flag.
• The sell-off has been climactic and the wedge bottom and trend channel line overshoot increase the odds of at least a small sideways to up pullback before the EURUSD continue lower. 
• For now, the EURUSD should still be in the two-legged sideways to up pullback phase.

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