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Minor EURUSD Pullback

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Market Overview: EURUSD Forex

The market is forming a minor EURUSD pullback on the weekly chart. The bears must create consecutive bear bars closing near their lows, breaking far below the 20-week EMA, to increase the odds of a reversal. The bulls want the 20-week EMA or the August 1 low to act as support, forming a larger double bottom bull flag (with Aug 1).

EURUSD Forex market

The Weekly EURUSD chart

EURUSD Weekly - Wedge, PB, Bears Need FT Selling, Minor EURUSD Pullback
  • This week’s candlestick on the weekly EURUSD Forex chart was a bear bar closing in its lower half with prominent tails.
  • Last week, we said traders would observe whether the bulls could create more follow-through buying trading above the July 1 high, or if the bears would be able to create decent bear bars in the weeks ahead instead.
  • The bears 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 Jan 2021).
  • They see the recent move (Sep 17) as a retest of the prior trend’s extreme high (Jul 1) and want a failed breakout above it.
  • They want a reversal from a higher high major trend reversal and a wedge pattern (Apr 21, Jul 1, and Sept 17).
  • They must create consecutive bear bars closing near their lows, breaking far below the 20-week EMA, to increase the odds of a reversal.
  • The bulls got a larger wedge pattern (Apr 21, Jul 1, and Sept 17), but the breakout above the July 1 was not strong.
  • They see the current move as a pullback and want it to be weak and sideways (long tails below candlesticks, doji(s), overlapping candlesticks).
  • They want the 20-week EMA or the August 1 low to act as support, forming a larger double bottom bull flag (with Aug 1).
  • The bulls need to create strong follow-through buying trading above the July 1 high to increase the odds of a resumption of the trend.
  • So far, the market traded above the July 1 high, but the move was not strong.
  • The buying pressure is slightly stronger (trending doji(s)), compared to the weaker selling pressure (limited follow-through selling).
  • Due to the wedge pattern (Apr 21, Jul 1, and Sept 17), the market may be in a sideways to down minor pullback phase.
  • For now, traders will see if the bears can create strong follow-through selling, testing the 20-day EMA.
  • Or will the pullback lack follow-through selling, trading mostly sideways with long tails below candlesticks instead?

The Daily EURUSD chart

EURUSD Daily - Wedge, PB, Bears Need Strong FT Selling
  • The market formed a small pullback early in the week (Sep 23), followed by a second leg sideways to down from midweek onwards.
  • Last week, we said traders would see if the bulls could create more follow-through buying above the July 1 high, or if the bears would be able to create strong bear bars to retest the August 1 low instead.
  • The bears view the recent move (Sep 17) as a retest of the prior high (Jul 1), and a failed breakout.
  • They want a reversal from a higher high major trend reversal, and a large wedge pattern (Apr 21, Jul 1, and Sep 17).
  • They must create strong consecutive bear bars trading far below the 20-day EMA and the August 1 low to increase the odds of a reversal.
  • The bulls got another leg up, forming the larger wedge pattern (Apr 21, Jul 1, and Sep 17), but the third leg up lacked sustained follow-through buying above the July 1 high.
  • They see the current move as a pullback, a two-legged move so far (Sep 19 and Sep 25).
  • They want the 20-day EMA or the bull trend line to act as a support area.
  • If the market trades lower, they want the August 1 low to act as support, forming a larger double bottom bull flag.
  • They want a retest of the September 17 high, even if it only forms a lower high.
  • So far, the market has formed a small two-legged pullback (Sep 19 and Sep 25), closing below the 20-day EMA.
  • The market could still be in the sideways to down pullback phase, forming the third leg down.
  • For now, the pullback may only be minor.
  • Traders will see if the bears can create sustained follow-through selling below the 20-day EMA.
  • Or will the pullback be weak and trading mostly sideways with the prior trading range (with weak bear bars and overlapping candlesticks) instead?

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