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EURUSD Weak Bear Bar after Testing Bear Trend Line

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Market Overview: EURUSD Forex

The EURUSD Forex was a weak bear bar after testing bear trend line, with tail above and below. The bulls failed to create a consecutive bull bar on the weekly chart. The bulls hope that this week was simply a pullback and want at least a small second leg sideways to up, closing above the bear trend line. The bears will need to create a follow-through bear bar to increase the odds of the EURUSD trading lower.

EURUSD Forex market

The Weekly EURUSD chart

EURUSD Forex Weekly Chart Pullback after Testing Bear Trend Line
  • This week’s candlestick on the weekly EURUSD Forex chart was a bear bar with prominent tails above and below. 
  • Last week, we said that the EURUSD slightly favor sideways to up and traders will be watching if the bulls can create sustained follow-through buying. If they can, it can lead to a larger 2-legged sideways to up pullback lasting many weeks.
  • This week traded higher but reversed into a bear bar but closed off the low.
  • The bears want a strong breakout below the 2017 low, and a measured move down based on the height of the 7-year trading range. This will take them to the year 2000 low.
  • The move down is in a tight bear channel. That means strong bears. 
  • The bears got the second leg sideways to down in August after the recent pullback. However, they did not get follow-through selling below July low.
  • This week, the bears manage to create a reversal lower from the bear trend line. They want a retest of Sept 6 low from a double top bear flag (Aug 10 and Sept 12).
  • The bears will need to create a follow-through bear bar to increase the odds of the EURUSD trading lower.
  • The bulls hope that the recent 4-week tight trading range pullback is the final flag of the move down which started in February 2022. They want a failed breakout below the 7-year trading range. 
  • They want a reversal higher from a wedge bottom (Mar 4, May 13 and July 14) and a double bottom with the July low (July 14 and Sept 6).
  • The bulls also have a micro wedge (July 14, Aug 23 and Sept 6).
  • However, the bulls failed to get follow-through buying again this week, a recurring theme since the selloff started in 2021.
  • The bulls hope that this week was simply a pullback and wants at least a small second leg sideways to up closing above the bear trend line.
  • Since this week was a bear bar, it is a sell signal bar for next week. However, the prominent tail below makes it a slightly weaker sell signal bar.
  • Traders will be monitoring if the bears get a follow-through bear bar next week or fail to do so. If they get that, the odds of a retest of Sept 6 low and a breakout attempt increases.
  • For now, the EURUSD may still be the sideways to up pullback phase.

The Daily EURUSD chart

EUSUD Forex Daily Chart Sideways Trading Range
  • The EURUSD traded higher on Monday but did not close above the bear trend line. Tuesday sold off below the 20-day exponential moving average followed by sideways trading from Wednesday to Friday.
  • Last week, we said that odds slightly favor sideways to up. If the EURUSD reverses lower from a double top bear flag (Aug 31 and Sept 9) breaking below Sept 6 low, odds are it would not go far and would reverse higher within a couple of weeks.
  • The bulls want a failed breakout below the 7-year trading range.
  • They hope that the recent 4-week tight trading range pullback is the final flag of the move down which started in February. 
  • The bulls want a reversal higher from a wedge bottom (Mar 4, May 13 and July 14) and a double bottom with the July low (July 14 and August 23).
  • The bulls also have a smaller wedge (July 14, Aug 23 and Sept 6).
  • They need to create strong consecutive bull bars closing near their highs breaking far above the bear trend line to increase the odds of a test of the August 10 high.
  • The bears want a continuation down and a measured move down based on the height of the 7-year trading range. That would take them to the year 2000 low.
  • They got a second leg sideways to down testing July low and want a breakout and a measured move down.
  • However, they have not been able to create follow-through selling below the July low.
  • The bears want another leg lower following Tuesday’s strong leg down re-testing Sept low.
  • While the EURUSD may still trade lower, the selling has been climactic and relentless since it started in Jan 2021. Odds favor a larger 2-legged sideways to up pullback lasting many weeks before the EURUSD trades much lower.
  • If the EURUSD reverses lower from a double top bear flag (Aug 10 and Sept 12) breaking below Sept 6 low, odds are it would not go too far and would reverse higher within a couple of weeks.
  • For now, odds slightly favor the EURUSD to still be in the sideways to up pullback phase.

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