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EURUSD Weak Follow-through Selling in Small Trading Range

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Market Overview: EURUSD Forex

EURUSD weak follow-through selling this week. Bears hope that this is simply a pullback and want at least another small leg down testing the Sept low. Bulls hope this is a higher low and wants a second leg sideways to up. The EURUSD is forming a small trading range around 0.95 and 1.00. This week’s doji bar followed 2 consecutive weeks of reversals. Big up, Big Down, big confusion.

EURUSD Forex market

The Weekly EURUSD chart

EURUSD Weak Follow-through Selling on Weekly Chart
  • This week’s candlestick on the weekly EURUSD Forex chart was a small bear doji.
  • Last week, we said that odds slightly favor sideways to down and traders will see if the bears can get a strong follow-through bear bar, retesting Sept low followed by a strong breakout, or fail to do so.
  • While this week traded below last week’s low, the bears did not have strong follow-through selling.
  • 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. 
  • While the breakout below the July-August low in September was strong, the bears failed to get follow-through selling. 
  • They did not get a strong follow-through bear bar after triggering the Low 1 sell signal this week too.
  • They hope this week was simply a pullback and want at least a retest of Sept low.
  • If next week trades higher, they want the EURUSD to stall and reverse lower again, forming a double top bear flag with October 4 high or around the bear trend line.
  • The bulls hope that the recent 10-week trading range (July to Sept) is the final flag of the move. 
  • They want a reversal higher from a wedge bottom (May 13, July 14 and Sept 28) and a trend channel line overshoot.
  • However, the bulls kept failing to get sustained follow-through buying, a recurring theme since the selloff started in 2021. 
  • The bulls will need to create strong consecutive bull bars closing near their highs, breaking far above the bear trend line and 20-week exponential moving average, to convince traders that a larger sideways to up pullback may be underway.
  • The bulls want to trigger a second entry long (High 2) by trading above this week’s high. If they do, traders will see if they get a strong entry bar closing near its high and subsequent follow-through buying.
  • Since this week was a bear doji bar, it is not a strong buy signal bar for next week. 
  • The EURUSD is forming a small trading range around 0.95 and 1.00. 
  • This week’s doji bar is slightly below the middle of this trading range. It followed 2 consecutive weeks of reversals. Big Down, Big Up, big confusion. This is a classic sign of trading range activity.
  • A trading range means an area of balance between the bulls and the bears.
  • Traders may BLSH (Buy Low, Sell High) between 0.95 and 1.00 until there is a breakout from either direction.
  • The 20-week exponential moving average and bear trend line remains resistances above.

The Daily EURUSD chart

EURUSD Daily Chart Higher Low Second Leg Up?
  • The EURUSD traded lower on Monday but there was no follow-through selling. Thursday traded lower but reversed higher intraday towards the 20-day exponential moving average.
  • Friday traded above Thursday’s high but reversed to close as a bear bar with a small tail below.
  • Last week, we said that odds slightly favor sideways to down to retest Sept low and if the EURUSD retests near the Sept low, but fails and reverses higher again, we may see another attempt by the bulls to start a 2-legged sideways to up move lasting many weeks.
  • The bulls want a failed breakout below the 7-year trading range.
  • They hope that the recent 10-week trading range pullback (July to Sept) is the final flag of the move down which started in February. 
  • The bulls want a reversal higher from a wedge bottom (May 13, July 14 and Sept 28) and trend channel line overshoot following a sell climax.
  • However, they have not been able to create sustained follow-through buying, a recurring theme since 2021.
  • The bulls see the current pullback simply as a retest of the September low and want a reversal higher from a higher low major trend reversal.
  • The bulls will need to create strong consecutive bull bars closing near their highs, breaking far above the 20-day exponential moving average and bear trend line, to convince traders that a larger 2-legged sideways to up pullback lasting many weeks may be underway.
  • They hope Thursday’s reversal higher triggering the larger High 2 buy signal will at least lead to a retest of the October 4 high.
  • However, they failed to get a follow-through bull bar on Friday. That means the bulls are not yet as strong as they would like to be.
  • 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.
  • The bears want another leg lower retesting the Sept low followed by a strong breakout with follow-through selling. 
  • However, this week, they failed to create strong follow-through selling.
  • They hope that Thursday’s test of the 20-day exponential moving average was simply a pullback and want at least a small second leg sideways to down retesting the Sept low.
  • The EURUSD is forming a trading range between 0.95 and 1.00. Big Down, Big Up, big confusion. This is a classic sign of trading range activity.
  • Traders will BLSH (Buy Low, Sell High) within this range until there is a strong breakout from either direction.
  • The 20-day exponential moving average and bear trend line remains resistances above.

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