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EURUSD Bulls Want a Breakout

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Market Overview: EURUSD Forex

The EURUSD bulls want a breakout and a measured move toward the 2021 high, based on the height of the 7-month trading range. Bulls see the February 6 move as a breakout pullback test of the December 24 high. Bears want at least a small second leg sideways to down to retest the February 6 low.

EURUSD Forex market

The Weekly EURUSD chart

EURUSD Weekly - 2nd Leg Down, or Breakout, EURUSD Bulls Want a Breakout
  • This week’s candlestick was a bull bar closing near the middle of its range, with a prominent tail above.
  • Last week, we said traders would watch for follow-through selling toward the 20-week EMA, or a stall around the December 24 high followed by a retest of the January 27 high.
  • The market traded higher, but the long tail above indicates some weakness for bulls.
  • Previously, bulls broke above the September 17 high but lacked follow-through buying.
  • Bulls see the February 6 move as a breakout pullback test of the December 24 high.
  • They want a weak, sideways pullback with overlapping bars, long tails below, and prominent bull bars.
  • Bulls want the December 24 high or the 20-week EMA to act as support, followed by a retest of the January 27 high and a sustained breakout above it.
  • They are looking for a measured move toward the 2021 high, based on the height of the 7-month trading range.
  • Bulls need consecutive strong bull bars breaking above the September 17 high and the bear trend line (not shown – drawn across the February 2018 and January 2021 highs) to increase the odds of trend resumption.
  • Bears see the January 27 rally as a buy vacuum test of the September 17 high and the bear trend line (not shown).
  • Bears want a failed breakout above the September 17 high, followed by a two-legged sideways to down pullback.
  • They want at least a small second leg sideways to down to retest the February 6 low.
  • Bears need consecutive strong bear bars to flip the market to Always In Short.
  • If the market trades higher, bears want a lower high relative to January 27.
  • The market recently broke above the 35-week trading range but failed and reversed back into it.
  • Traders are deciding whether the February 6 move is a breakout pullback test of the December 24 high or the start of a two-legged sideways to down pullback.
  • For now, the market remains in a 35-week trading range. 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.
  • Traders will watch whether bulls generate follow-through buying to retest the January 27 high, or whether bears create a second leg sideways to down to retest the February 6 low.

The Daily EURUSD chart

EURUSD Daily - Bulls Want Strong BO, Bears Want Lower High
  • EURUSD traded higher on Monday, forming a large bull bar. The market then pulled back and formed two consecutive dojis on Thursday and Friday.
  • Last week, we said traders would watch whether bears could generate follow-through selling below the 20-day EMA and the December 24 high, or whether the market would stall there and retest the January 27 high.
  • Bears want a reversal from a higher high major trend reversal and a trend channel line overshoot on January 27.
  • They see the current move as a retest of the prior high and want a second leg sideways to down from a lower high major trend reversal.
  • Bears want limited follow-through buying, with prominent upper tails, overlapping bars, and bear bars.
  • If the market trades higher, bears want the February 10 area to act as resistance, forming a double top bear flag.
  • Bears need consecutive strong bear bars closing near their lows and breaking below the 20-day EMA to flip the market to Always In Short.
  • Bulls see the February 6 move as a breakout pullback test of the December 24 breakout point.
  • They want a strong breakout above the January 27 high, followed by trend resumption.
  • Bulls need consecutive strong bull bars to increase the odds of a successful breakout above the trading range.
  • They want the 20-day EMA and the December 24 high to hold as support.
  • EURUSD recently broke above the trading range, but follow-through buying has been limited.
  • Traders are deciding whether the February 6 move is a breakout pullback test of the December 24 high or the start of a two-legged sideways to down pullback.
  • The market remains in a trading range. 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.
  • For now, traders will watch whether bulls can create a second leg sideways to up to retest the January 27 high, or whether bears create a second leg sideways to down below the February 6 low.

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