Market Overview: EURUSD Forex
The EURUSD Forex traded down in May from a EURUSD micro double top (April and May) and closed below the 20-month exponential moving average. The bears need to create follow-through selling in June to increase the odds of a deeper pullback. The bulls want the broad bull channel to continue up completing the wedge pattern with the first two legs being February 2 and April 26.
EURUSD Forex market
The Monthly EURUSD Forex chart
- The May monthly EURUSD candlestick was a big bear bar closing in the lower half of its range.
- Last month, we said that the odds will continue to slightly favor sideways to up until the bears can create strong bear bars.
- May did not trade above April’s high and broke far below its low, closing below the 20-month exponential moving average.
- The bears want a reversal down from a double top with the February high and a micro double top (Apr 26 and May 3).
- Previously, the bears were not able to create follow-through selling (in March).
- Now, they need to create a follow-through bear bar in June to increase the odds of a deeper pullback.
- The bears will need to create consecutive strong bear bars to convince traders that they are back in control.
- The bulls got breakouts above the February high in April and May but failed to get sustained follow-through buying.
- They hope that the current pullback will form a higher low.
- They want another leg up, completing the wedge pattern with the first two legs being February 2 and April 26.
- The last 5 candlesticks have a lot of overlapping range but are sloping slightly up. The market is in a smaller broad bull channel following a bull spike from November.
- The EURUSD is in a sideways trading range with a slight upside tilt. Traders will BLSH (Buy Low, Sell High) within the trading range.
- Since May was a big bear bar closing near its low, it is a sell signal bar for June. June may trade slightly below May’s low.
- The bears will need to create a follow-through bear bar to convince traders that a deeper pullback may be underway.
- Traders will see if the bears can create a follow-through bear bar or will the market trade slightly lower but close with a long tail below or with a bull body.
The Weekly EURUSD chart
- This week’s candlestick on the weekly EURUSD Forex chart was a bear doji with tails above and below.
- Last week, we said that the odds slightly favor a small second leg sideways to down after a small pullback. Traders want to see if the bears can get a follow-through bear bar following this week’s close below the 20-week EMA.
- This week traded below last week’s low but reversed to close slightly above it and around the middle of the week’s range.
- The bulls hope to get at least a retest of the April high after the current pullback.
- They want the 20-week exponential moving average to act as support. They hope the EURUSD will reverse back above the 20-week exponential moving average soon.
- If the EURUSD trades much lower, they want a reversal up from a double-bottom bull flag with the March low.
- The current selloff is in a tight bear channel. The bulls will need a strong reversal bar or a micro double bottom before they would be willing to buy aggressively.
- The first pullback (bounce) would likely be minor.
- The bears got a reversal down from a higher high major trend reversal and failed breakout above the February 2 high.
- They have a 5-bar bear micro channel and want a retest of the March 15 low.
- The bear doji closing around the middle of the bar means weak follow-through following last week’s break below the 20-week exponential moving average.
- The bears hope that this week was simply a small pullback and want the tight bear channel to continue.
- If there is a pullback, the bears want at least a small second leg sideways to down testing the current leg low (May 31).
- For now, odds slightly favor a small second leg sideways to down after a small pullback.
- Can the EURUSD continue down to March 15 low without a pullback? Yes, that is possible as the bears are still in control.
- The bulls will only be willing to buy more aggressively when they have a strong signal bar such as a strong bull reversal bar or at least a micro double bottom.
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