Curso de Trading de Brooks

Aprenda a operar con la acción del precio de forma consistente

 

More results...

Weekly EURUSD Breakout Below the Trading Range

By

Market Overview: EURUSD Forex

The market formed a weekly EURUSD breakout below the trading range. The bears want a measured move based on the height of the trading range. The bulls want a reversal from a large double bottom bull flag (Oct 3 and Jan 2), a wedge pattern (Oct 23, Nov 22, and Jan 10) and a lower low major trend reversal.

EURUSD Forex market

The Weekly EURUSD chart

EURUSD Weekly - Bears Need FT Selling for Measured Move, Weekly EURUSD Breakout Below the Trading Range
  • This week’s candlestick on the weekly EURUSD Forex chart was a bear bar closing in its lower half with a long tail above.
  • Last week, we said that traders would see if the bears could create a follow-through bear bar following last week’s breakout below the November 22 low or if the market would stall and form a minor pullback (bounce) in the next few weeks instead.
  • The bears got follow-through selling this week albeit not as strong as they hoped for (overlapping last week’s range).
  • They got another leg down creating the wedge pattern (Oct 23, Nov 22, and Jan 10).
  • They want a strong breakout below the trading range low and a measured move based on the height of the trading range.
  • They must create sustained follow-through selling to increase the odds of lower prices.
  • If the market trades higher, they want a double top bear flag with the December 6 high.
  • The bulls see the move to the November 22 low as a sell vacuum and a bear leg within a trading range.
  • They see the move to the January 10 low as a retest of the prior leg’s extreme low (Nov 22).
  • They want a failed breakout followed by a retest of the middle of the trading range.
  • They want a reversal from a large double bottom bull flag (Oct 3 and Jan 2), a wedge pattern (Oct 23, Nov 22, and Jan 10) and a lower low major trend reversal.
  • They must create consecutive bull bars closing near their highs to indicate that they are back in control.
  • Since this week’s candlestick is a bear bar closing in its lower half, it can be a sell signal bar for next week.
  • The move down since September is in a tight bear channel.
  • The selling pressure is stronger (consecutive bear bars, big bear bars closing in its lower half) than the weaker buying pressure (bull bars with limited or no follow-through buying).
  • The market may still trade at least a little lower.
  • Traders will see if the bears can continue to create follow-through selling. If they can do that, the odds of a measured move down will increase.
  • Or will the market stall and form a minor pullback (bounce) in the next few weeks instead?
  • Most breakouts from trading ranges fail and odds favor the trading range to continue.
  • However, the longer the market trades below the trading range low with sustained follow-through selling, the more the odds will swing in favor of a successful breakout and a measured move down.

The Daily EURUSD chart

EURUSD Daily - Tight Bear Channel, Bears Need FT Selling
  • The EURUSD traded higher early in the week but stalled at the 20-day EMA. The market then traded sideways to down for the remainder of the week.
  • Previously, we said that traders would see if the bulls could create follow-through buying trading far above the 20-day EMA or if the bears would be able to create a retest and breakout below the November 22 low with follow-through selling instead.
  • So far, the market has traded below the November 22 low, but the follow-through selling is still limited.
  • The bears got a third leg sideways to down trading below the trading range low (the first two legs being Oct 23 and Nov 22).
  • They want a strong breakout below the trading range followed by a measured move based on the height of the trading range.
  • If the market trades higher, they want a double top bear flag with the December 6 or January 6 highs.
  • They want the 20-day EMA or the bear trend line to act as resistance.
  • The bulls see the whole move since September as a sell vacuum and a bear leg testing the trading range low and the current move as a retest of the November 22 low.
  • They want a failed breakout and a reversal from a wedge pattern (Oct 23, Nov 22, and Jan 10), a lower low major trend reversal and a small double bottom (Jan 2 and Jan 10).
  • The problem with the bulls’s case is that they have not yet been able to create sustained follow-through buying trading far above the 20-day EMA and the bear trend line.
  • They must create consecutive bull bars closing near their highs trading far above the 20-day EMA and the bear trend line to indicate they are back in control.
  • So far, the market is trading lower in a tight bear channel which means persistent selling.
  • Odds slightly favor the market to still be in the sideways to down phase.
  • Traders will see if the bears can continue to create more follow-through selling.
  • Or will the bulls be able to create a pullback into the trading range instead?
  • Most breakouts from trading ranges fail and odds favor the trading range to continue.
  • However, the longer the market trades below the trading range with follow-through selling, the more the odds will swing in favor of a successful breakout and a measured move down.

Market analysis reports archive

You can access all weekend reports on the Market Analysis page.

>