Market Overview: EURUSD Forex
The weekly EURUSD bulls need follow-through bull bars closing near their highs to flip the market into Always In Long. Bears view the last three weeks as a pullback forming a double top bear flag (July 2 and July 15).
EURUSD Forex market
The Weekly EURUSD chart
- This week formed an outside bull bar, closing slightly above the middle of its range.
- Last week, we said the initial breakout from the ii (inside-inside) pattern could fail about half the time, and traders would watch for a failed-breakout reversal.
- Bulls view the recent move as a bear leg within the trading range, forming a large wedge bull flag (November 5, March 13, and June 24), a parabolic wedge (May 21, June 5, and June 24), and a trend channel line overshoot (June 24).
- Bulls want a failed breakout below the trading range, followed by a bull leg to retest the high of the trading range.
- Bulls want the breakout below the ii (inside-inside) pattern to fail, followed by a pullback to retest the 20-week EMA.
- Bulls need to create consecutive bull bars closing near their highs to flip the market into Always In Long.
- Bulls want the low of the trading range to act as support.
- If the market trades lower, bulls want the June 24 low to act as support, forming a small double bottom.
- Bears got a bear leg testing the low of the trading range.
- Bears want a reversal from a head and shoulders top (September 17, January 27, and April 17), followed by a measured move based on the height of the trading range.
- Bears view the last three weeks as a pullback forming a double top bear flag (July 2 and July 15).
- Bears need consecutive strong bear bars breaking decisively below the March 13 low, with follow-through selling, to increase the odds of a successful breakout.
- If the market trades higher, bears want the bear trend line or the 20-week EMA to act as resistance, forming another lower high.
- Recently, the market broke below the low of the trading range, but there was no follow-through selling.
- Markets have inertia and tend to continue doing what they have been doing. About 80% of breakout attempts fail.
- Traders will see whether bulls can create follow-through buying over the next few weeks to test the 20-week EMA, or whether the market instead forms a failed failure and retests the June 24 low.
- A failed failure in this case is when the reversal of the failed breakout below the ii pattern fails, resuming the original bear breakout.
- Until there is a clear breakout with strong follow-through, traders may continue to Buy Low, Sell High (BLSH), buying near the lower third and selling near the upper third of the range.
- The middle of the range is an area of balance and often acts as a magnet.
The Daily EURUSD chart
- EURUSD traded lower early in the week, but there was no follow-through selling. The market then traded higher on Wednesday, although the follow-through buying was limited as well.
- Last week, we said traders would watch whether bears could create a retest of the June 24 low, followed by a strong breakout below the trading range, or whether the market would stall around the trading range low or the June 24 low instead.
- Bears view the current move as a pullback forming a wedge bear flag (June 26, July 2, and July 15) and a double top bear flag (July 2 and July 15).
- Bears want a retest of the June 24 low, followed by a strong breakout and a measured move based on the height of the trading range.
- Bears want the 20-day EMA or the bear trend line to act as resistance.
- If the market trades higher, bears want the June 15 high to act as resistance, forming a lower high and a large double top bear flag.
- Bears need consecutive bear bars closing near their lows and breaking decisively below the low of the trading range to increase the odds of a successful breakout.
- Bulls view the recent move (June 24) as a bear leg testing the low of the trading range.
- Bulls want a failed breakout, followed by a bull leg to retest the high of the range.
- Bulls want a reversal from a large wedge bull flag (November 5, March 13, and June 24), a parabolic wedge (May 21, June 8, and June 24), and a trend channel line overshoot (June 24).
- Bulls want the low of the trading range to hold as support.
- If the market trades lower, bulls will view it as a retest of the June 24 low and want the move to be weak and sideways, with overlapping candlesticks and prominent lower tails, forming a double bottom and a higher or lower low major trend reversal.
- Bulls need consecutive strong bull bars trading far above the 20-day EMA and the bear trend line to demonstrate control.
- The market broke below the trading range, followed by a pullback that tested the 20-day EMA over the last three weeks.
- Traders will watch whether bears can create a retest of the June 24 low, followed by a strong breakout below the trading range.
- Traders will also watch whether the market stalls around the trading range low or the June 24 low instead. If the retest of the June 24 low is weak and remains sideways for a couple of weeks rather than breaking decisively lower, the odds of a move higher will increase.
- Markets have inertia and tend to continue doing what they have been doing. About 80% of breakout attempts fail.
- Until there is a strong breakout with sustained follow-through, traders may continue to Buy Low, Sell High (BLSH), buying near the lower third and selling near the upper third of the range.
- The middle of the range is an area of balance and often acts as a magnet.
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