Market Overview: EURUSD Forex
The EURUSD Forex was a EURUSD weak bear bar on the weekly chart. The bears want this to be the start of a two-legged sideways-to-down pullback. They will need to create follow-through selling next week. The bulls want any pullback to be sideways and not deep.
EURUSD Forex market
The Weekly EURUSD chart
- This week’s candlestick on the weekly EURUSD Forex chart was a bear bar with a long tail below.
- Last week, we said that while odds continue to slightly favor sideways to up, the wedge pattern increases the odds that we will see at least a small pullback beginning within a couple of weeks.
- The bulls got a failed breakout below the 7-year trading range.
- The move up is in a tight bull channel. That means strong bulls.
- The bulls hope that the market is now Always In Long.
- They have also broken above the major bear trend line with follow-through buying.
- The strong move up increases the odds of at least a small second leg sideways to up after a pullback.
- The bulls want any pullback to be sideways and not deep.
- Since the September low, the bulls have created bigger bull bodies with closes near their highs with follow-through buying, while the bear bars are weak with no follow-through selling.
- Will the bears be able to create follow-through selling now?
- The bears want a reversal lower from a double top bear flag (May 30 and Jan 2) and a lower high around May/June high. They also have a wedge pattern (Nov 15, Dec 5 and Dec 15).
- Because of the strong move up, the bears will need a strong reversal bar or at least a micro double top before they would be willing to sell more aggressively.
- December 30 and January 2 formed a micro double top.
- The bears hope that this week is the start of a two-legged sideways to down lasting at least a few weeks.
- The first targets for the bears are the 20-week exponential moving average and the November 21 low which is the start of the channel.
- Since this week was a bear bar with a long tail below, it is a weaker sell signal bar.
- The bears will need to create a strong follow-through bear bar to increase the odds of lower prices.
- While the move up since October is strong, it has lasted a long time and is climactic.
- The wedge pattern increases the odds that we will see at least a small pullback beginning within a couple of weeks. It may have begun this week.
- Odds slightly favor sideways to down movements in the next few weeks to relieve the overbought conditions.
- Traders will see if the pullback phase is weak or strong. If the pullback is weak and sideways, the odds of another strong leg-up increase.
The Daily EURUSD chart
- The EURUSD traded lower early in the week followed by a sideways trading range around the 20-day exponential moving average.
- Previously, we said that the wedge pattern increases the odds of a pullback.
- So far, the EURUSD has moved sideways since the wedge.
- The bulls got a failed breakout below the 7-year trading range. The spike & channel up is a change in the market’s character.
- They hope that the market has flipped into Always In Long.
- Bulls want a retest of the December 15 high and a breakout above. They want a continuation of the tight bull channel up.
- They want any pullback to be sideways and not deep. If they get a weak and shallow pullback, the odds of another strong leg-up increase.
- If there is a deep pullback, the bulls want a reversal from a higher low major trend reversal and a larger second leg sideways to up.
- The bears see the move up as a deep pullback from the February selloff.
- They want a reversal lower from a double top bear flag (May 30 and December 15) and a wedge top (Nov 15, Dec 5, and Dec 15). They also have a small double top (December 15 and January 2).
- The next target for the bears is the November 21 low which is the start of the bull channel.
- The bears need to create strong consecutive bear bars closing near their lows to increase the odds of lower prices.
- While this week could be the start of the pullback, the overlapping bars indicate that the bears are not yet strong.
- Since Friday was an outside bull bar, it is not a strong sell signal bar for Monday.
- It increases the odds that the EURUSD may trade at least a little higher early next week.
- Traders will see if the bears can get at least another small second leg sideways to down, or if next week retest January 2 high and breaks out above.
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