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EURUSD Bulls Need a Strong Breakout

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Market Overview: EURUSD Forex

The EURUSD bulls need a strong breakout with sustained follow-through buying above the April 21 high. The bears want a reversal from a higher high major trend reversal and a wedge pattern (Mar 18, Apr 21, and Jun 12).

EURUSD Forex market

The Weekly EURUSD chart

EURUSD Weekly - 6-Bar Bull Microchannel, Bears Want HH MTR, EURUSD Bulls Need a Strong Breakout
  • This week’s candlestick on the weekly EURUSD Forex chart was an inside doji closing around the middle of its range.
  • Last week, we said traders would see if the bulls could create more follow-through buying trading above the April 21 high, or if the follow-through buying would be weak and the market stall around the April 21 high instead.
  • The market traded sideways for the week overlapping within last week’s range.
  • The bears 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 current leg is in a 6-bar bull microchannel which means persistent buying. There may be buyers below the first pullback.
  • The bulls want any pullback to be brief and sideways followed by a strong retest of the Jun 12 high.
  • If there is a deeper pullback, they want the 20-week EMA or the May 12 low to act as support, forming a double bottom bull flag.
  • 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).
  • The current leg up formed a 6-bar bull microchannel which means persistent buying.
  • 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 market continues to stall around the April 21 high area over the next few weeks, the odds of a higher high major trend reversal will increase.
  • For now, traders will see if the bulls can create more follow-through buying trading above the April 21 high. If there is a pullback, traders will see if there are buyers below the first pullback followed by a retest of the Jun 12 high.
  • Or will the bears be able to create strong bear bars in the weeks ahead instead?

The Daily EURUSD chart

EURUSD Daily - Bulls Want Strong BO, Need FT Buying
  • The EURUSD traded sideways for the week. Thursday formed a pullback near the 20-day EMA, but the follow-through selling was limited.
  • Last week, we said traders would see if the bulls could create strong follow-through buying trading above the April 21 high, or if the market would stall around the April 21 high followed by a TBTL (Ten Bars, Two Legs) pullback instead.
  • The bears 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 (Mar 18, Apr 21, and Jun 12), a smaller wedge bear flag in the third leg up (May 21, Jun 5, and Jun 12) and a double top with the Jun 12 high.
  • 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 deeper pullback will increase.
  • While the move is strong, it could still 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 must create sustained follow-through buying above the April 21 high to increase the odds of a successful breakout and a measured move.
  • 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 (perhaps holding above the 20-day EMA), the odds of another leg up will increase after that.

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