Market Overview: EURUSD Forex
The EURUSD bulls want a strong breakout above the April 21 high. They must create strong follow-through buying over the next few weeks to increase the odds of a measured move up. The bears want a reversal from a higher high major trend reversal and a wedge pattern (Mar 18, Apr 21, and Jun 12).
The Weekly EURUSD chart
- This week’s candlestick on the weekly EURUSD Forex chart was a bull bar closing in its upper half with a prominent tail above.
- Last week, we said traders would see if the bears could create a strong bear entry bar, or if the follow-through selling would be weak and the candlestick close with a long tail below or with a bull body instead.
- The bears could not create a bear entry bar, and the market traded higher to retest the April 21 high.
- They see the current move as a retest of the April 21 high and want a reversal from a higher high major trend reversal and a wedge pattern (Mar 18, Apr 21, and Jun 12).
- They want a failed breakout followed by a retest of the middle of the trading range.
- They must create strong bear bars with sustained follow-through selling to show they are back in control.
- The bulls got a retest of the April 21 high and want a strong breakout and a measured move based on the height of the trading range. That would take the market to the 2021 high area.
- They want another big leg up to complete the wedge pattern, with the first two legs being March 18 and April 21. The third leg is currently underway.
- The market traded above the April 21 high this week but closed below it with a long tail above.
- The bulls must create a strong breakout above the April 21 high with follow-through buying over the next few weeks to increase the odds of a measured move up.
- The move up (Jun 12) is in a tight bull channel with stronger buying pressure (big bull bars, consecutive bull bars) as compared to the weaker selling pressure (bear bars with limited follow-through selling).
- Traders expect a retest of the April 21 high. It has done so.
- The long tail above this week’s candlestick indicates some selling activity (albeit not strong yet) above the prior swing high.
- Most breakouts from trading ranges fail. Markets have inertia and tend to continue what they have been doing.
- That means trading ranges (and trends) are resistant to change and tend to continue.
- The bulls must create strong follow-through buying breaking above the April 21 high to increase the odds of a successful breakout.
- If the move lacks strong follow-through buying (overlapping candlesticks, doji(s), inside bars, long tails above candlesticks), the odds of a higher high major trend reversal or a double top will increase.
- For now, traders will see if the bulls can create more follow-through buying trading above the April 21 high.
- Or will the follow-through buying be weak and the market stall around the April 21 high instead?
The Daily EURUSD chart
- The EURUSD traded sideways to up for the week, breaking above the April 21 high on Thursday. Friday was an inside doji.
- Last week, we said traders would see if the bears could create strong bear bars breaking below the wedge bear flag (May 14, May 21, and May 23), or if the follow-through selling would be limited and the market continue to trade around the 20-day EMA instead.
- The bears were not able to create a breakout below the wedge pattern.
- They see the current move as a retest of the prior high (Apr 21) and want it to form a higher high major trend reversal.
- They want a reversal from a large wedge pattern (Apr 3, Apr 21, and Jun 12) and a smaller wedge bear flag in the third leg up (May 21, Jun 5, and Jun 12).
- They see Thursday (Jun 12) forming a trend channel line overshoot and want a pullback testing the May 12 low.
- They want a failed breakout followed by a retest of the middle of the trading range.
- They need to create strong consecutive bear bars breaking below the wedge bear flag (May 21, Jun 5, and Jun 12) to show they are back in control.
- The bulls want a strong breakout above the April 21 high, followed by a measured move based on the height of the trading range. That would take the market to near the 2021 high area.
- They want the third leg up to complete the large wedge pattern, with the first two legs being March 18 and April 21. The third leg up is currently underway.
- They need to create strong consecutive bull bars closing near their highs trading above the April 21 high to increase the odds of a successful breakout.
- If the market trades lower, they want the 20-day EMA or the May 29 low to act as support, forming a large double bottom bull flag.
- So far, the retest of the April 21 high has overlapping candlesticks which indicates the bulls are not as strong as the prior legs up.
- If this continues to be the case, the odds of a higher high major trend reversal will increase.
- The wedge in the third leg up (May 21, Jun 5, and Jun 12) and the trend channel line overshoot (Jun 12) increases the odds of a pullback.
- While the current move is strong, it could be a bull leg and a buy vacuum in the trading range.
- Markets have inertia, and odds slightly favor the trading range to continue.
- The bulls need to create sustained follow-through buying to increase the odds of a successful breakout above the trading range.
- For now, traders will see if the bulls can create strong follow-through buying trading above the April 21 high.
- Or will the market stall around the April 21 high followed by a TBTL (Ten Bars, Two Legs) pullback instead?
- If a pullback forms but is weak and trading mostly sideways, the odds of another leg up from a double bottom bull flag (with May 12) will increase after that.
Market analysis reports archive
You can access all weekend reports on the Market Analysis page.
