Market Overview: EURUSD Forex
The weekly EURUSD bulls need strong follow-through buying breaking above the recent tight trading range to increase the odds of another leg up. The bears want a reversal from a lower high major trend reversal or a double top bear flag (Jul 24 and Sept 5).
EURUSD Forex market
The Weekly EURUSD chart
- This week’s candlestick on the weekly EURUSD Forex chart was a bull doji closing in its upper half with a long tail below and a prominent tail above.
- Last week, we said the pullback (Aug 1) appears to be minor. Traders would see if the bulls could create strong bull bars, followed by a breakout above the July 1 high, or if the market would continue to stall below the July 24 high, followed by bear bars instead.
- The market traded lower in the first half of the week but lacked follow-through selling. The EURUSD reversed higher on Friday.
- The bears see the recent move (Jul 1) as a bull leg and a buy vacuum test of the multi-year trading range high. They want the move to form a lower high (vs Jan 2021).
- They want the upper third of the multi-year trading range, or the May 2021 high, to act as a resistance area.
- They see the current move as a retest of the prior trend’s extreme high (Jul 1).
- They want a reversal from a lower high major trend reversal or a double top bear flag (Jul 24 and Sept 5).
- If the market trades higher, they want it to form a double top with the July 1 high.
- They must create strong consecutive bear bars breaking below the tight trading range to show they are back in control.
- Previously, the bulls got a strong move in a tight bull channel (Jul 1).
- They want another leg up to form the larger wedge pattern, with the first two legs being April 21 and July 1 highs.
- They want a measured move (based on the height of the trading range), which will take the market to the 2021 high area.
- They see the recent move (Aug 1) as a two-legged pullback and hope that it has alleviated the recent overbought condition.
- 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).
- The bulls need to create strong follow-through buying trading above the tight trading range to increase the odds of a resumption of the trend.
- So far, the move up (Jul 1) was in a tight bull channel, which means strong bulls.
- The recent pullback (Aug 1) consists of overlapping candlesticks, bull bars, and prominent tails below candlesticks.
- The bear attempted to trade lower over the last four weeks, but the moves lacked follow-through selling (long tails below candlesticks and closing in their upper half).
- Traders will see if the bulls can create a strong breakout above the tight trading range, followed by a breakout above the July 1 high.
- If the pullback (Aug 1) remains weak (sideways with overlapping ranges, bull bars, prominent tails below candlesticks) and holding above the 20-week EMA, the odds of a retest and breakout above the July 1 high will increase soon.
- Or will the market continue to stall around the July 24 high area instead? If this condition persists, traders will conclude that the bulls aren’t able to push higher, which will likely increase the odds of selling pressure returning.
- For now, the pullback (Aug 1) appears to be minor.
The Daily EURUSD chart
- The market traded lower in the first half of the week but lacked follow-through selling. Friday reversed higher but closed with a prominent tail above.
- Previously, we said the pullback (Aug 1) may only be minor. Traders would see if the bulls could create more follow-through buying to retest and break above the July 1 high, or if the market would continue to stall below the July 24 high instead.
- The market has been trading sideways around the 20-day EMA and below the July 24 high over the past few weeks.
- The bears got a two-legged pullback (Aug 1) following the large wedge pattern (Mar 18, Apr 21, and Jul 1) and embedded wedge (May 26, Jun 12, and Jul 1).
- They view the current move as a retest of the prior high (Jul 1), forming a double top bear flag (Jul 24 and Sept 5) and a smaller wedge bear flag (Aug 13, Aug 22, and Sept 5).
- If the market trades higher, they want the July 24 or July 1 highs to act as resistance areas.
- They must create strong consecutive bear bars breaking below the 4-week tight trading range and 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 see the recent move (Aug 1) as a two-legged pullback and hope that it has alleviated the prior overbought condition.
- They want another leg up to form the larger wedge pattern, with the first two legs being April 21 and July 1 highs.
- They want the 20-day EMA to act as a support area.
- The bulls need to create a strong breakout above the 4-week tight trading range accompanied by follow-through buying to increase the odds of another leg up.
- The prior move (Jul 1) was strong (in a tight bull channel), which means strong bulls.
- The recent pullback (Aug 1) appears relatively weaker compared to the prior leg up (May 12 to Jul 1).
- The market attempted to trade lower several times over the last few weeks (Aug 22, Aug 27, and Sept 3) but lacked follow-through selling below the 20-day EMA.
- The pullback (Aug 1) may only be minor.
- Traders will see if the bulls can create more follow-through buying, breaking above the tight trading range.
- Or will the market continue to stall below the July 24 high instead? If this condition persists, it will increase the odds of selling pressure returning in the weeks ahead.
Market analysis reports archive
You can access all weekend reports on the Market Analysis page.
