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EURUSD Retest January Low

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Market Overview: EURUSD Forex

The EURUSD retest January low this week but lacked follow-through selling. The bulls see the current move (Feb 3) as a retest of the prior trend’s extreme low and want a higher low major trend reversal. If the market trades higher, the bears want the 20-week EMA to act as resistance.

EURUSD Forex market

The Weekly EURUSD chart

EURUSD Weekly - Retest Low, HL MTR, Bulls Need FT, EURUSD Retest January Low
  • This week’s candlestick on the weekly EURUSD Forex chart was a bull bar closing slightly below the middle of its range with a long tail above.
  • Last week, we said that traders would see if the bears could create a strong retest of the January 13 low, or if the market would trade slightly lower but close with a long tail below or a bull body instead.
  • The market gapped down on Monday, but the follow-through selling was limited.
  • Previously, the bulls got a strong pullback breaking above the bear trend line.
  • They see the whole move down (from Sept) as a sell vacuum and a bear leg within a trading range.
  • They see the current move (Feb 3) as a retest of the prior trend’s extreme low and want a higher low major trend reversal.
  • They want a failed breakout followed by a retest of the middle of the trading range.
  • They need to create follow-through buying trading far above the 20-week EMA to increase the odds of the bull leg beginning.
  • The bears got a strong move down in a wedge pattern (Oct 23, Nov 22, and Jan 13).
  • They see the recent move (Jan 27) as a pullback.
  • They got a reversal from a double top bear flag (Dec 6 and Jan 27), followed by a retest of the January 13 low (Feb 3).
  • They want a strong breakout and a measured move based on the height of the trading range.
  • If the market trades higher, they want the 20-week EMA to act as resistance followed by another leg down from a wedge bear flag (the first two legs being Dec 6 and Jan 27).
  • So far, the market has traded sideways in the last 8-weeks.
  • The breakout and follow-through selling below the trading range has been limited.
  • For now, traders will see if the bulls can create more follow-through buying breaking above the bear trend line and the 20-week EMA.
  • Or if the bears can create a retest and breakout below the January 13 low instead.
  • If the retest of the January 13 low is weak (overlapping candlesticks, doji(s), bull bars with long tails below), the odds of a higher (or lower) low major trend reversal followed by another sideways to up leg will increase. So far, this appears to be the case.
  • If the bears can get strong consecutive bear bars closing near their lows breaking far below the trading range, the odds will swing in favor of a successful breakout.
  • Most breakouts from trading ranges fail and odds favor the trading range to continue.

The Daily EURUSD chart

EURUSD Daily - Bulls Need FT Buying; Bears Want RT Low
  • The EURUSD gapped down on Monday but reversed higher in the first half of the week. The market formed a pullback on Thursday and Friday.
  • Previously, we said traders would see if the bulls could create more follow-through buying or if the market would trade slightly higher, but stall around the December 6 high area instead.
  • The market stalled below the December 6 high followed by a retest of the January 13 low this week.
  • The bears saw the recent move (Jan 27) as a two-legged pullback and got a reversal from a double top bear flag with the December 6 high.
  • They want a strong breakout followed by a measured move based on the height of the trading range.
  • If the market trades higher, they want the January 27 high to act as resistance followed by a double top bear flag (with the Jan 27 high).
  • The bulls see the whole move since September as a sell vacuum and a bear leg testing the trading range low.
  • They want a failed breakout and a reversal from a wedge pattern (Oct 23, Nov 22, and Jan 13) and an embedded wedge (Dec 13, Jan 2, and Jan 13).
  • They see this week as a retest of the prior trend’s extreme low (Jan 13) and want a reversal from a higher low major trend reversal.
  • They must continue to create follow-through buying trading far above the bear trend line and the 20-week EMA to increase the odds of the bull leg beginning.
  • If the market trades lower, they want the January 13 or the February 3 lows area to act as support.
  • So far, the market has traded sideways in the last 8-weeks.
  • The follow-through selling following the breakout below the trading range remains limited.
  • For now, traders will see if the bulls can create more follow-through buying breaking far above the bear trend line and the 20-week EMA.
  • Or will the market retest the January 13 low followed by a breakout attempt instead?
  • Most breakouts from trading ranges fail and odds favor the trading range to continue.

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