Brooks Trading Course

Learn to Trade Price Action Consistently

 

More results...

EURUSD Close below the 20-Week EMA

By

Market Overview: EURUSD Forex

The EURUSD close below the 20-week EMA on the weekly chart. The bears need to create follow-through selling next week to increase the odds of lower prices. The bulls hope that the 20-week exponential moving average will act as support and want at least a small second leg sideways to up to retest the July 18 high. 

EURUSD Forex market

The Weekly EURUSD chart

EURUSD Close below the 20-Week EMA, Bears Need FT, Bears Need FT
  • This week’s candlestick on the weekly EURUSD Forex chart was a bear bar closing in the lower half with a small tail below.
  • Last week, we said that the EURUSD may still trade sideways to down in the coming week(s) and traders will see if the bears can create a close below the 20-week exponential moving average or will the market trade slightly lower but continue to stall around the 20-week EMA.
  • This week traded lower and closed below the 20-week EMA.
  • The bears got a reversal from a failed breakout above the April high, a wedge top (Feb 2, Apr 26, and Jul 18) and a trend channel line overshoot.
  • The move down is in a tight bear channel consisting of 5 consecutive bear bars, testing the 20-week exponential moving average. 
  • Since this week closed below the 20-week EMA, the bears need to create a follow-through bear bar to increase the odds of lower prices.
  • The bulls previously got the third leg up forming a wedge pattern (Feb 2, Apr 26, and Jul 18).
  • They want a strong leg-up lasting many but did not get follow-through buying above the April high.
  • They hope that the current leg down is simply a pullback and want at least a small leg to retest the July 18 high. They see the market as still being in a broad bull channel.
  • The bulls want the 20-week exponential moving average to act as support and the market to form a higher low.
  • Since this week was a bear bar closing in the lower half, it is a sell signal bar for next week.
  • For now, the EURUSD may still trade sideways to down in the coming week(s). 
  • Traders will see if the bears can create a follow-through bear bar following this week’s close below the 20-week exponential moving average.
  • Or will the market trade slightly lower, but close with a bull body or a long tail below, reversing above the 20-week EMA?
  • The odds slightly favor the market to still be in the broad bull channel and favor at least a small retest of the July 18 high after the current pullback. 
  • The retest can simply be a few bars and may not reach the prior leg extreme high (Jul 18), in which case, it will then form a lower high major trend reversal pattern.

The Daily EURUSD chart

EURUSD Daily: Second Leg Down, Overlapping Bars
  • The EURUSD traded sideways to down for the week. Friday traded lower but close as a doji bar.
  • Last week, we said that the EURUSD may still be in the sideways to down pullback phase and traders will see if the bears can create another leg down, testing the bull trend line or will the pullback continue to trade sideways (with overlapping bars, doji(s) and bull bars).
  • The bears got another leg down this week but did not get to the bull trend line. While the market traded lower, there was a lot of overlapping price action.
  • They got a failed breakout above the April high, a reversal down from a trend channel line overshoot and a wedge top (Feb 2, Apr 26, and Jul 18).
  • They see the recent sideways trading as forming a double top bear flag (Aug 4 and Aug 10) or a wedge bear flag (Jul 31, Aug 4, and Aug 10) and got another leg down this week.
  • They want a test of the bull trend line below.
  • The bears will need to create consecutive strong bear bars trading far below the bull trend line to increase the odds of a reversal down.
  • The bulls previously got the third leg up, completing the large wedge pattern (Feb 2, Apr 26, and Jul 18). 
  • They want the breakout above April to be the start of a new leg lasting many weeks but were not able to get sustained follow-through buying.
  • They hope that the recent move down is simply a pullback and at least a small retest of the prior leg extreme (July 18).
  • If the marker trades lower, they want the market to stall around the bull trend line area and reverse up.
  • The move down since July 18 is in a tight bear channel. 
  • For now, the EURUSD may still be in the sideways to down pullback phase.
  • Traders will see if the bears can a strong test and breakout below the bull trend line or will the market start to stall around the current levels.
  • Odds slightly favor the EURUSD to form at least a small retest of the prior leg extreme (Jul 18) after the pullback.
  • The retest can simply be a few bars and may not reach the prior leg extreme high, in which case, it will then form a lower high major trend reversal pattern.

Market analysis reports archive

You can access all weekend reports on the Market Analysis page.

>