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Weak Weekly EURUSD Breakout

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Market Overview: EURUSD Forex

The market formed a weak weekly EURUSD breakout above the July 1 high. 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. The bears want a reversal from a higher high major trend reversal and a wedge pattern.

EURUSD Forex market

The Weekly EURUSD chart

EURUSD Weekly - Weak BO, Wedge, Bulls Need FT Buying, Weak Weekly EURUSD Breakout
  • This week’s candlestick on the weekly EURUSD Forex chart was a bull doji closing in its lower half with a long tail above.
  • Last week, we said traders would see if the bulls could create more follow-through buying and a breakout above the July 1 high, or if the market would continue to stall around the July 24 high area instead.
  • The market broke above the July 1 high in the first half of the week but lacked sustained follow-through buying.
  • 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 current move as a retest of the prior trend’s extreme high (Jul 1).
  • They want a reversal from a higher high major trend reversal and a wedge pattern (Apr 21, Jul 1 and Sept 17). They want a failed breakout above the July 1 high.
  • They must create strong consecutive bear bars closing near their lows, breaking far below the 20-week EMA, to increase the odds of a reversal.
  • The bulls want another leg up to form the larger wedge pattern, with the first two legs being April 21 and July 1 highs. They got it this week.
  • 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 resumption of the trend from a double bottom bull flag (Jul 17 and Aug 1) and a wedge bull flag (Jul 17, Aug 1, and Aug 27).
  • They want any pullback to be weak and sideways (long tails below candlesticks, doji(s), overlapping candlesticks) and the 20-week EMA to act as support.
  • 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.
  • The market traded above the July 1 high this week, but the long tail above the candlestick indicates that the bulls are not yet as strong as they had hoped.
  • For now, traders will see if the bulls can create more follow-through buying trading above the July 1 high.
  • Or will the bears be able to create decent bear bars in the weeks ahead? The bears need to do more to show they are back in control.

The Daily EURUSD chart

EURUSD Daily - Bulls Need Strong FT Buying, Wedge
  • The market broke above the July 1 high in the first half of the week, but the Wednesday candlestick reversed into a bear reversal bar. Thursday and Friday traded lower to test the 20-day EMA.
  • Last week, we said traders would see if the bulls could create more follow-through buying, breaking above the July 24 and July 1 high, or if the market would continue to stall below the July 24 high instead.
  • The market broke above the July 1 high but lacked sustained follow-through buying.
  • The bears view the current move as a retest of the prior high (Jul 1), forming a large wedge pattern (Apr 21, Jul 1, and Sep 17).
  • They want a reversal from a higher high major trend reversal and a failed breakout above the July 1 high.
  • 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 measured move (based on the height of the trading range), which will take the market to 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 got it this week, but the move lacked sustained follow-through buying.
  • They need to create strong follow-through buying trading above the July 1 high to increase the odds of the trend resuming.
  • They want the 20-day EMA 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.
  • So far, the market traded above the July 1 high but lacked sustained follow-through buying. The bulls are not yet strong.
  • For now, traders will see if the bulls can create more follow-through buying above the July 1 high.
  • Or will the bears be able to create strong bear bars to retest the August 1 low instead?

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