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Weekly EURUSD Bear Leg in a Trading Range

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Market Overview: EURUSD Forex

The market formed a weekly EURUSD bear leg in a trading range. Bulls want the 20-week EMA and the August low area to act as support, forming a large double bottom bull flag (Aug 1 and Nov 5) and a wedge bull flag (Sep 25, Oct 9, Nov 5). Bears need strong follow-through selling below the 20-week EMA to increase the odds of a larger second leg sideways to down.

EURUSD Forex market

The Weekly EURUSD chart

EURUSD Weekly - Retest Nov 5 Low, Bear Leg in TR, Weekly EURUSD Bear Leg in a Trading Range
  • This week’s EURUSD candlestick was a bear bar closing near its low and below the 20-week EMA.
  • Last week, we said traders would watch whether bulls could create follow-through buying above the 20-week EMA, or if the market would trade slightly higher but stall and reverse below it.
  • Bulls see the recent move (Nov 5) as a pullback within a broader bull trend.
  • They see the current move as a retest of the November 5 low and want the market to form a higher low or a small double bottom.
  • They want the 20-week EMA and the August low area to act as support, forming a large double bottom bull flag (Aug 1 and Nov 5) and a wedge bull flag (Sep 25, Oct 9, Nov 5).
  • They need a strong break above the 20-day EMA and the bear trendline to resume the bull trend.
  • Bulls need to create strong consecutive bull bars to demonstrate they are taking control.
  • Bears want the upper third of the multi-year trading range to act as resistance, creating a lower high relative to January 2021 — which remains the case so far.
  • They are looking for a reversal from a higher-high major trend reversal (Sep 17) and a wedge top (Apr 21, Jul 1, Sep 17).
  • There could be sellers above the 8-bar bear microchannel pullback (Nov 5), and that was the case this week.
  • The pullback had overlapping bars, indicating the bears are still not very strong.
  • Bears need strong follow-through selling below the 20-week EMA to increase the odds of a larger second leg sideways to down.
  • The market has been in a 23-week trading range.
  • Traders may continue to Buy Low, Sell High within the range — buying near the lower third and selling near the upper third — until a clear breakout with follow-through appears.
  • For now, traders will watch whether bears can create follow-through selling and break below the November 5 low.
  • Or will the market stall around the November 5 low area and then reverse above the 20-week EMA in the weeks ahead?
  • The move from the September 17 high to the November 5 low looks like a bear leg within the trading range.
  • For now, the odds slightly favor the November 5 pullback being minor.

The Daily EURUSD chart

EURUSD Daily - Bear Leg in Trading Range
  • EURUSD traded sideways to down for the week, testing the November 5 low area.
  • Last week, we said traders would watch whether bulls could generate more follow-through buying above the 20-day EMA and the bear trendline, or if the market would stall around the October 28 high and retest the November 5 low.
  • Bears created a pullback from a higher-high major trend reversal and a large wedge top (Apr 21, Jul 1, Sep 17).
  • The selloff had several pushes with overlapping ranges, indicating the bears are still not strong.
  • They see the recent move (Nov 13) as a pullback and want a larger second leg sideways to down from a double top bear flag (Oct 28 and Nov 13).
  • Bears need strong consecutive bear bars closing near their lows, pushing far below the 20-day EMA and the August 1 low, to increase the odds of a successful reversal.
  • If the market trades higher, bears want the 20-day EMA or the bear trendline to act as resistance.
  • Bulls see the recent move (Nov 5) as a pullback forming a large double bottom bull flag (Aug 1 and Nov 5) and a wedge bull flag (Sep 25, Oct 9, Nov 5).
  • They see the current move as a retest of the November 5 low and want a small double bottom to form.
  • Bulls need strong consecutive bull bars closing decisively above the 20-day EMA and the bear trendline to increase the odds of the bull trend resuming.
  • EURUSD has been in a 118-day trading range.
  • Traders may continue to Buy Low, Sell High within the range — buying near the lower third and selling near the upper third — until a strong breakout with sustained follow-through develops in either direction.
  • The middle of the range can act as an area of balance and a magnet.
  • Traders will watch whether bears can produce more follow-through selling and break far below the November 5 low.
  • Or will the market stall around the November 5 low area and reverse above the 20-day EMA instead?
  • For now, the move from the September 17 high to the November 5 low still looks like a bear leg within a trading range and a minor pullback.

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