Market Overview: EURUSD Forex
The market is forming a weekly EURUSD retest of recent high. The bulls want another leg up to form the wedge pattern, with the first two legs being April 21 and July 1 highs. The bears want a lower high major trend reversal and a small double top.
EURUSD Forex market
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 strong follow-through selling, or if the move would lack strong follow-through selling and be followed by a retest of the recent leg high (Jul 1) in the weeks ahead instead.
- The market formed a retest of the July 1 high this week, a lower high.
- The bears see the recent move (Jul 1) as a bull leg and a buy vacuum test of the multi-year trading range high.
- They want a reversal from a wedge pattern (Mar 18, Apr 21, and Jul 1) and an embedded wedge (May 26, Jun 12, and Jul 1).
- They want the upper third of the multi-year trading range, or the May 2021 high, to act as a resistance area.
- They want the move to form a lower high (vs May 2021).
- They see the current move as a retest of the prior trend’s extreme high (Jul 1) and want a lower high major trend reversal.
- They want a TBTL (Ten Bars, Two Legs) pullback lasting a few weeks.
- The bulls got a strong move up in the form of a tight bull channel.
- They want another leg up to form the wedge pattern, with the first two legs being April 21 and July 1 highs.
- They want a measured move (based on the height of the trading range), which will take the market to the 2021 high area.
- They want a retest of the recent leg extreme high (Jul 1), followed by a strong breakout. The move could be underway.
- If there is a pullback, they want the July 17 low to act as support, forming a small double bottom bull flag.
- The move up (Jul 1) is in a tight bull channel with stronger buying pressure (big bull bars, consecutive bull bars) vs weaker selling pressure (bear bars with limited follow-through selling).
- The recent pullback (Jul 17) is relatively weaker compared to the prior leg up (May 12 to Jul 1). The odds slightly favor the pullback to be minor.
- The market remains Always In Long.
- For now, traders will see if the bulls can create follow-through buying and a breakout above the July 1 high.
- Or will the market stall around the July 1 high area instead? If this is the case, the market may form a second leg sideways to down to retest the July 17 low.
The Daily EURUSD chart
- The EURUSD traded higher in the first half of the week. Thursday and Friday formed a small pullback.
- Last week, we said traders would see if the pullback (Jul 17) would be deep with strong follow-through selling, or be more sideways and weaker (overlapping ranges, bull bars, doji(s), prominent tails below candlesticks) instead.
- The pullback had a lot of overlapping ranges, which indicates the bears are not yet strong.
- The bears view the recent rally as forming a large wedge pattern (Mar 18, Apr 21, and Jul 1) and an embedded wedge in the third leg up (May 26, Jun 12, and Jul 1).
- They view this week as a retest of the prior trend’s extreme high, forming a lower high major trend reversal and a small double top (Jul 1 and Jul 25).
- They want a second leg sideways to down to retest the July 17 low.
- They must create strong consecutive bear bars trading far below the 20-day EMA to show they are back in control.
- The bulls want a strong breakout above the trading range, followed by a measured move (based on the height of the trading range), which will take the market to near the 2021 high area.
- They want another leg up to form the larger wedge pattern, with the first two legs being April 21 and July 1 highs.
- They see the recent move (Jul 17) as a pullback and hope that it has alleviated the overbought condition.
- They want a retest and breakout above the July 1 high, followed by a resumption of the trend. The move could be underway.
- If the market trades lower, they want the July 17 low to act as support, forming a double bottom bull flag.
- The move up (Jul 1) was strong (in a tight bull channel), which means strong bulls.
- The recent pullback (Jul 17) was relatively weaker compared to the prior leg up (May 12 to Jul 1). The pullback may only be minor.
- For now, traders will see if the bulls can create strong follow-through buying and a breakout above the July 1 high.
- Or will the market stall around the July 1 high area, followed by a second leg sideways to down instead?
- Odds slightly favor the market to be in the sideways to up phase.
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