Market Overview: EURUSD Forex
EURUSD tight bull channel up formed testing the February 2 high. The bulls have a 5-bar bull micro channel which means strong bulls. Odds slightly favor buyers below the first pullback from such a strong micro channel. The bears want a reversal down from a higher high major trend reversal, but they would need a strong sell signal bar or a micro double top before they would be willing to sell aggressively.
EURUSD Forex market
The Weekly EURUSD chart
- This week’s candlestick on the weekly EURUSD Forex chart was a bull bar with a prominent tail above.
- Last week, we said that traders will see if the bulls can get a follow-through bull bar following the breakout above the inside bar.
- The bulls got a follow-through bull bar breaking above the February high but closing below it.
- The move up since March 15 is in a tight bull channel and the bulls have a 5-bar bull micro channel. That means persistent bulls.
- The last 4 candlesticks have prominent tails above. The bulls are not as strong as they would like to be.
- The bulls want a strong breakout above February 2 high and another strong leg up, possibly retesting February 2022 highs.
- For that, they need to create follow-through buying breaking far above the February 2 high.
- The current move up is strong enough for traders to expect at least a small second leg sideways to up after a pullback.
- The bears want a reversal down from a higher high major trend reversal. They see a wedge (Mar 7, Mar 23, and Apr 14) and a micro wedge (Mar 23, Apr 4, and Apr 14).
- They want a failed breakout above the February 2 high and a retest of the March 15 low.
- The problem with the bear’s case is that the current move-up is in a tight bull channel with consecutive bull bars.
- They will need to create a strong sell signal bar or a micro double top before traders will be willing to sell more aggressively.
- For now, odds slightly favor at least a small second leg sideways to up after a pullback. There are usually buyers below such a strong bull micro channel.
- The wedge and micro wedge increase the odds that we may see a minor pullback begin at any moment.
- EURUSD is in a trading range between 1.1 and 1.05. Traders will BLSH (Buy Low, Sell High) within a trading range.
- Until there is a strong breakout above with follow-through buying, the current leg could simply be a bull leg within a trading range.
The Daily EURUSD chart
- The EURUSD traded lower on Monday but reversed higher to break above February 2 high by Thursday. Friday traded higher but reversed into an outside bear bar.
- Last week, we said that the odds slightly favor the EURUSD to trade at least a little higher. Traders will see if the bulls get a retest and breakout above February high or will the EURUSD trade slightly higher but forms a strong sell signal bar with follow-through selling.
- The bulls got a strong spike & channel up from October.
- The move up was strong enough to have flipped the market into Always In Long.
- They then got a larger second leg sideways to up from a double bottom bull flag with January 6 low.
- The move-up is in a tight bull channel. That means strong bulls.
- They want a breakout above the February 2 high and another strong leg up.
- If there is a pullback, the bulls want a larger second leg sideways to up retesting April 15 high.
- The bears see the move up since September as a 50% pullback of the selloff which started in May 2021.
- They want a reversal down from a higher high major trend reversal (with Feb high).
- They also have a wedge pattern (Mar 23, April 4, and April 14).
- The problem with the bear’s case is that they have not been able to create sustained follow-through selling since March 15.
- The bears need to create consecutive bear bars closing near their lows to convince traders of a deeper pullback.
- The 3 consecutive bull bars this week (Tue, Wed, and Thurs) appearing after a prolonged move is climactic.
- The wedge bear flag near the top of the trading range increases the odds of a pullback which can begin at any moment.
- Since Friday was a bear bar closing near its low, it is a sell signal bar for Monday.
- The bears need to create follow-through selling early next week to increase the odds of a deeper pullback.
- Traders will see if the bears can create strong follow-through selling, or will the EURUSD trade slightly lower, but resume the leg higher breaking far above the February 2 high.
- Can the EURUSD continue higher and break out above February 2 high? Yes. Until the bears can create strong bear bars, odds continue to slightly favor sideways to up.
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