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EURUSD Bull Follow-through Bar

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Market Overview: EURUSD Forex

The EURUSD Forex December candlestick was a bull follow-through bar following the breakout above the October inside bull bar. Odds slightly favor the EURUSD to trade at least a little higher towards the 20-month exponential moving average. The move up is strong enough for traders to expect at least a second leg sideways to up after a small pullback.

EURUSD Forex market

The Monthly EURUSD Forex chart

EURUSD Monthly: Bull Follow-through Bar
  • The December monthly EURUSD candlestick was a bull bar closing near its high. 
  • Last month, we said that odds slightly favor the EURUSD to trade at least slightly higher and traders will see if the bulls can create a decent follow-through bull bar in December. 
  • December candlestick broke above the bear trend line and was a good follow-through bull bar.
  • The bulls want a failed breakout below the 7-year trading range. The EURUSD has reversed back above the 7-year trading range low.
  • December was the third bull bar since August 2020. Bulls hope that the market has flipped into Always In Long.
  • The move up since October is strong. Odds favor at least a small second leg sideways to up after a pullback.
  • The next targets for the bulls are the 20-month exponential moving average which is around the May/June high and February 10 high.
  • The bulls need to break far above the 20-month exponential moving average to convince traders that a reversal higher is underway.
  • The bears want a reversal lower from a double top bear flag with May/June high around the 20-month exponential moving average.
  • They want a retest of the September low followed by a breakout and a measured move down.
  • While the selloff since June 2021 was very strong, it has also lasted a long time and is climactic.
  • The trend channel line overshoot (September) and parabolic wedge bottom (Nov 24, May 13 and Sept 28), increase the odds of at least a small sideways to up pullback lasting a few months. The pullback started in October and is still underway.
  • Since December was a bull bar closing near its high following a big bull bar in November, it is a weak sell signal bar and short setup.
  • The bears will need a strong reversal bar or a micro double top before they would be willing to sell aggressively.
  • For now, odds slightly favor the EURUSD to trade at least slightly higher.
  • Traders will see if the bulls manage to close January above the 20-month exponential moving average or will the EURUSD trade higher first but reverse to close January with a bear body.

The Weekly EURUSD chart

EURUSD Weekly: Tight Channel Up, Consecutive Bull Bars
  • This week’s candlestick on the weekly EURUSD Forex chart was a bull bar closing near the high. 
  • Previously, we said that while odds continue to slightly favor sideways to up, it has lasted a long time and is climactic. The wedge pattern increases the odds that we will see at least a small pullback beginning within a couple of weeks.
  • So far, the EURUSD continues to trade sideways to up in a spike and channel.
  • Bulls want a failed breakout below the 7-year trading range. The EURUSD has reversed back above the 7-year trading range low.
  • Since the September low, the bulls have created bigger bull bodies with closes near their highs with follow-through buying, while the bear bars are weak with no follow-through selling. 
  • The move-up is in a tight bull channel. That means strong bulls.
  • The bulls hope that the market is now Always In Long. 
  • They have also broken above the major bear trend line with follow-through buying. 
  • The strong move up increases the odds of at least a small second leg sideways to up after a pullback. 
  • The bears want a reversal lower from a double top bear flag and a lower high around May/June high. They also have a wedge pattern (Nov 15, Dec 5 and Dec 15).
  • The first targets for the bears are the 20-week exponential moving average and the November 21 low which is the start of the channel.
  • If the EURUSD trades higher next week, they want it to form a double top with December 15 high.
  • Because of the strong move up, the bears will need a strong reversal bar or at least a micro double top before they would be willing to sell more aggressively. 
  • Since this week was a bull bar closing near its high, it is a weak sell signal bar.
  • While the move up is strong and odds continue to slightly favor sideways to up, it has lasted a long time and is climactic.
  • The wedge pattern increases the odds that we will see at least a small pullback beginning within a couple of weeks. This remains true.

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