Market Overview: EURUSD Forex
The EURUSD Forex market moved lower last week, with bulls unable to close above the MA in what could be breakout mode. It is a High 2 on the Daily chart and a Low 2 on the Weekly chart – ie confusing. It is also a big expanding triangle, and we are low in that range. If bulls get follow-through early in the week, that might trap the sellers under the MA here, and we can reverse up. Bears need a follow-through bar here to keep the shorts in the market.
EURUSD Forex market
The Weekly EURUSD chart
- The EURUSD Forex market moved lower last week with a bear doji at the moving average (MA) in what could be breakout mode.
- The bar before was the first bullish thing in many months – so we expected traders to sell it.
- The bulls wanted a follow-through bar closing above the MA. This would scare bears from shorting, likely exiting above that bar. But now we have a sell signal.
- The bar is small, which means low risk, so low probability. Most small bars make the market go above and below them.
- If it’s not a good buy or a great sell, that’s 50/50 and breakout mode in a trading range.
- The week before, an outside up bar is a triangle on a lower timeframe. So, it was not a high probability long there. But it does mean limit order traders are likely below the low and in the sell zone of that bar.
- Traders expected 2 legs sideways to up, a correction back to the MA after such a tight channel and possible wedge bottom. We may have already completed it.
- 11 consecutive bear bars is a streak and climactic. It might mean that the correction needs to be about half of that structure – so 5 or so bars – so a few more weeks before the market picks a direction.
- We are no longer always in short, so better to be long or flat.
- Swing bulls who took a chance on the inside bar got 1:1, so we might have a magnet above the high of that inside bar to test down and then move back up.
- Can you sell the bear bar? It’s difficult because it first triggered buys above the bull bar. The bears have also had tails below for many weeks, which means scalping.
- Some traders will buy below that bar, betting it’s a weak sell and scale in lower, but most traders should not do that. A better buy would be to wait for another bull bar above the MA and buy that for a swing.
- Some bears got stuck at the low of that outside bar, so they might get a chance to break even, which is a little lower down.
- Expect sideways to down next week.
The Daily EURUSD chart
- The EURUSD Forex market is pulling back after consecutive bull bars above the MA.
- It’s a broad bull channel, and we are in the middle. The bull breakout was surprising; some bulls wanted a discount to buy lower.
- It is a High 2 buy setup near the moving average, which is a reasonable buy.
- But we have had a few legs up. Some bears see it as three pushes, a wedge top testing the prior low from May. They want a good sell signal for a test of the October low.
- But there are a lot of bull bars – closing on their highs, closing above the highs of prior bull bars. That is not a good environment to sell in.
- It was a bull microchannel at the start of the week, so some limit bulls are waiting under the last big bull bar, near the MA – a high-probability buy location.
- The High 2 is a small bar, like the weekly bar – so we might go above and below it. Most traders taking that long would leave a position to scale in lower above a good bull bar.
- A trend line below has been acting as support, and the price might also need to get back there for more buyers.
- Bears that sold on Monday got 1:1 immediately, and we tested their entry, which is usually a good short scalp.
- We triggered the stop order bears below on Thursday, and Friday is disappointing. They should get a chance to get out at breakeven on Monday.
- Always in bulls might have exited last week and are looking for a good buy signal, either above Friday or a follow-through bull bar above Friday or wait for one at the MA near the low of the channel.
- Better to be long or flat.
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