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EURUSD June monthly candlestick was inside bear bar

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Market Overview: EURUSD Forex

The EURUSD Forex market gave an inside bear bar on monthly chart and is in a 10-week trading range. Bears want a breakout below the 2017 low followed by a measured move down based on the height of the 7-year trading range height. Bulls want a reversal higher from a wedge bottom and a double bottom from the 7-year trading range low. Traders will BLSH (Buy Low, Sell High) until there is a strong breakout from either direction. 

EURUSD Forex market

The Monthly EURUSD Forex chart

EURUSD Forex Monthly Chart Inside Bear Bar Micro Double Bottom
  • The June Monthly EURUSD candlestick was a big inside bear bar with a long tail below. 
  • Last month, we said odds are June should trade at least slightly above May. 
  • June traded lower for the month but did not trade below May low.
  • Since June was an inside bar, the EURUSD is in breakout mode. Sometimes the bar following an inside bar is another inside bar. It would then form an ii (inside-inside) pattern which is also a breakout mode.
  • The first breakout from an inside bar can fail 50% of the time.
  • The bulls hope the sharp sell-off from 2021 was a sell vacuum test of the 2017 low.
  • They want a failed breakout from below March 2020 low and a reversal up from a trend channel line overshoot and parabolic wedge (August 20, November 24, May 13).
  • Bulls also have a lower low major trend reversal and a double bottom with the 2017 low. May and June’s low formed a micro double bottom.
  • However, the bulls failed to create a consecutive bull bar in June following May’s strong reversal bar.
  • 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.
  • The sell-off since June 2021 is in a tight bear channel. That means persistent selling and strong bears.
  • The market has been in a trading range for seven years. It is now near the bottom of the range. Reversals are more likely than breakouts. 
  • 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.
  • The odds of a reversal from the bottom of the 7-year trading range are slightly higher than a strong breakout below 2017 low and a measured move down.
  • For now, the EURUSD has been in a sideways trading range for the past 2 months.
  • Traders will BLSH (Buy Low, Sell High) until there is a strong breakout from either direction.

The Weekly EURUSD chart

EURUSD Forex Weekly Chart Micro Double Bottom 10-week Trading Range
  • This week’s candlestick on the weekly EURUSD Forex chart was an outside bear bar with a long tail below. 
  • Last week, we said that traders still 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 EURUSD stalled around the bear trend line and the bears got the second leg sideways to down this week. 
  • The bears want the EURUSD to stall around or below the May 30 high, the bear trend line, or the 20-week exponential moving average.
  • 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.
  • If the bears get at least 2 strong bear bars closing below the 2017 low, odds of a breakout and a measured move increase.
  • The bulls hope 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 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).
  • They also have a micro double bottom (June 15 and July 1).
  • The first target for the bulls is the May 30 major lower high.  
  • Bulls will need to create consecutive bull bars trading far above the May 30 high to convince traders that a reversal higher may be underway.
  • 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 still 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.
  • Traders will continue to BLSH (Buy Low, Sell High) until there is a strong breakout from the 10-week trading range.
  • If the EURUSD trades higher but stalls around or slightly below the May 30 high, odds are the bears will return to sell the double top bear flag.

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