Market Overview: EURUSD Forex
EURUSD Forex weak bear follow-through retesting low and the bears got a weak follow-through bar on the weekly chart. The bears want a breakout below the May low followed by a measured move down based on the height of the 7-year trading range. The bulls want a reversal higher from a double bottom major trend reversal following the trend channel line overshoot and wedge bottom.
EURUSD Forex market
The Weekly EURUSD chart
- This week’s candlestick on the weekly EURUSD Forex chart was a bear doji closing around the middle of the bar.
- Last week, we said that odds are this week should trade at least slightly lower. Bears want a strong follow-through bear bar while the bulls want a bull bar closing near the high, even though the EURUSD may trade slightly lower first.
- While the bears got follow-through selling this week, the bear doji indicates that the bears are not as strong as they could have been.
- We said that the bears want a retest of the 2017 low followed by a strong breakout and a measured move down based on the height of the 7-year trading range. This week was weak follow-through retesting low.
- However, the bears were not able to get a breakout below the May low.
- Since this week was a bear doji, it is not a strong sell signal bar for next week. Selling below a weak sell signal bar at the bottom of the 7-year trading range may not be an ideal setup.
- This week fulfilled the minimum requirement for a second leg sideways to down for the bears.
- The bulls hope that the sell-off since March was a sell vacuum test of the 7-year trading range low. They want at least a 2-legged sideways to up pullback.
- The bulls hope that this week was simply a retest of the low and want a reversal higher from a double bottom (May 13 and Jun 15) following a trend channel line overshoot and a wedge bottom (Aug 20, Nov 24 and May 13).
- The first target for the bulls is the May 30 major lower high. They need to create consecutive bull bars closing near their highs and trading far above May 30 high to convince traders that a reversal higher may be underway.
- If the EURUSD trades slightly higher in the next 1 to 2 weeks but stalls around or below the May 30 high, or around the 20-week exponential moving average, the bears will likely return to sell the double top bear flag.
- Al has said that the market has been in a trading range for seven years. Reversals are more likely than breakouts and a measured move down. This remains true.
- Therefore, as strong as the sell-off 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.
- For now, traders need more information, therefore more bars. The EURUSD would likely need to trade sideways for a couple more weeks for traders to get more clarity.
The Daily EURUSD chart
- The EURUSD tested May low by Wednesday but did not trade below it. Wednesday reversed into a weak bull bar and the bulls got follow-through buying on Thursday. Friday was an inside bear bar with a long tail below.
- Last week, we said that odds slightly favor the EURUSD to trade at least slightly lower and traders will be monitoring whether the bears get follow-through selling and a retest of the 2017 low, or the EURUSD stalls and reverse from a higher low.
- This week did test the 2017 low but did not quite reach it and reversed slightly higher from a higher low.
- The bulls hope this week was simply a retest of the May low.
- The bulls want a reversal higher from a double bottom higher low major trend reversal following a trend channel like overshoot and a wedge bottom (Jan 28, Mar 4 and May 13).
- Since Friday was an inside bar, it is a breakout situation. The bulls want the EURUSD to trade above Friday’s high to trigger the buy entry.
- We have said that there should be at least a small second leg sideways to down once the pullback is over. This week fulfilled the minimum requirement for the second leg sideways to down.
- The bears want a re-test of the 2017 low followed by a breakout and a measured move down based on the height of the 7-year trading range.
- They see this week simply as a pullback and want at least a small second leg sideways to down following June’s leg down.
- Friday’s bear inside bar is a sell signal bar for Monday. However, the long tail below makes it a weaker sell signal bar, especially following 2 bull bars at the bottom of the trading range.
- While the context slightly favor sideways to up pullback, the bulls will need to create consecutive bull bars closing near their highs to convince traders that a deeper pullback may be underway.
- If the pullback is more sideways and stalls around or below May high or around the 20-day exponential moving average, odds are the bears will return to sell the double top bear flag or lower high.
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