EURUSD breakout point test sideways to up

Market Overview: EURUSD Forex

EURUSD breakout point test with continued trading sideways to up. The current pullback has a lot of overlapping price action, indicating that the bulls are not strong yet. The bulls need to create consecutive bull bars closing near their highs and trading back into the 10-week trading range, to increase the odds of a failed breakout below the 2017 low. If the pullback remains sideways, odds are the bears will get a second leg sideways to down re-testing July low. 

EURUSD Forex market

The Weekly EURUSD chart

• This week’s candlestick on the weekly EURUSD Forex chart was a bull bar with a long tail above. It closed below last week’s high.
• Last week, we said the EURUSD may still be in the sideways to up pullback phase.
• This week traded above last week’s high testing the breakout point (May low), but reversed to close below the middle of the bar. More than half of the candlestick was overlapping with the prior 3 bars.
• 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. This will take them to the year 2000 low.
• They got 2 bear bars closing below the 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. This remains true.
• 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.
• Bulls hope that the recent 10-week trading range (April – June) 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.
• However, the bulls have repeatedly failed to create strong follow-through buying since the sell-off. 
• The bulls need to create consecutive bull bars closing near their highs trading back into the 10-week trading range. If they get that, the odds of a failed breakout below the 2017 low increase.
• While there is a 5-bar bull micro channel, the candlesticks are mostly overlapping one another. The bulls are not yet strong.
• If the current pullback remains sideways, odds are the bears will return to re-test July.
• For now, the EURUSD may still be in the sideways to up pullback phase.
• Odds slightly favor the EURUSD to form a second leg sideways to down re-testing the July low after the pullback is over.

The Daily EURUSD chart

• The EURUSD traded sideways and broke above the tight trading range on Wednesday. The bulls got weak follow-through buying on Thursday, but Friday reversed back into the tight trading range.
• Last week, we said that the EURUSD may still be in the sideways to up pullback phase.
• The bulls hope that the 10-week trading range (April – June) is the final flag of the move down which started in 2021. They want a failed breakout below the 7-year trading range.
• The bulls want a reversal higher from a wedge bottom (Mar 4, May 13 and July 14 wedge) and a trend channel line overshoot.
• So far, they have not yet been able to create consecutive bull bars closing near their highs.
• The bear trend line is resistance above.
• The bears want a measured move down based on the height of the 7-year trading range. That would take them to the year 2000 low.
• They see the current move as a wedge bear flag (July 21, Aug 2 and Aug 10) and want a second leg sideways to down re-testing July low followed by a breakout and a measured move down.
• The bears want the pullback to be more sideways and stall around the 20-day exponential moving average or the bear trend line. So far, they have this.
• For now, the EURUSD may still be in the sideways to up pullback phase.
• Odds slightly favor the EURUSD to re-test the July low after the pullback is over.

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