Market Overview: EURUSD Forex
The market formed a weekly EURUSD pullback to the 20-week EMA. Bulls want the 20-week EMA to act as support, followed by at least a small sideways-to-up leg to retest the December 24 high. Bears need strong consecutive bear bars breaking well below the 20-week EMA to show control.
EURUSD Forex market
The Weekly EURUSD chart
- This week’s EURUSD candlestick was a bear bar closing near its low, testing the 20-week EMA.
- Last week, we said traders would watch whether bulls could get follow-through buying toward the September 17 high or whether the market would stall and retest the 20-week EMA.
- Bulls retested the recent trend extreme high (September 17), forming a lower high on December 24.
- The rally from the November 21 low formed a 7-bar bull microchannel, indicating persistent buying; buyers may appear below its first pullback.
- Bulls see the current move as a pullback forming another leg in a developing wedge bull flag (first two legs: August 1 and November 5).
- Bulls want the 20-week EMA to act as support, followed by at least a small sideways-to-up leg to retest the December 24 high.
- They want the pullback to be weak and sideways, with little follow-through selling.
- Bears want the upper third of the multi-year trading range to act as resistance, keeping a lower high relative to the January 2021 high, which remains the case so far.
- Bears see the December 24 pullback as a retest of the prior trend extreme high and want it to stall below the September 17 high to form a lower high major trend reversal.
- Bears need strong consecutive bear bars breaking well below the 20-week EMA to show control.
- The market has been in a 30-week trading range.
- Until there is a clear breakout with strong follow-through, traders may continue to Buy Low, Sell High (BLSH), buying near the lower third and selling near the upper third of the range.
- The market is trading near the middle of the range, which can act as a balance area and a magnet.
- Traders will watch whether bears can produce a follow-through bear bar closing below the 20-week EMA.
- Or will buyers emerge after the pullback below the 7-bar bull microchannel to retest the December 24 high instead?
- For now, the pullback is likely minor unless there is a strong breakout below the August 1 low.
The Daily EURUSD chart
- EURUSD traded sideways to down below the 20-day EMA this week.
- Previously, we said traders would watch whether bulls could get follow-through buying above the October 1 high or whether bears could form strong bear bars trading below the 20-day EMA.
- Bears see the December 24 rally as a retest of the prior trend extreme high and want it to stall below the September 17 high to form a lower high major trend reversal.
- They want the October 1 high to act as resistance, forming a double top bear flag (October 1 and December 24), followed by a sideways-to-down leg to retest the August 1 low.
- The selloff from the December 24 high is in a tight bear channel, indicating persistent selling; bears expect at least a small second leg sideways to down after a pullback.
- If the market trades higher, bears want the 20-day EMA or the December 24 high to act as resistance.
- Bears need strong consecutive bear bars closing near their lows and breaking well below the August 1 low to increase the odds of a successful reversal.
- Bulls got a retest of the prior leg extreme high (September 17), forming a lower high on December 24.
- Bulls see the current move as another leg of a developing wedge bull flag (first two legs: August 1 and November 5).
- Bulls want the pullback to form a higher low relative to the November 5 low.
- They need strong consecutive bull bars trading above the 20-day EMA to show control.
- EURUSD has been in a 151-day trading range.
- Until there is a strong breakout with sustained follow-through, traders may continue to Buy Low, Sell High (BLSH), buying near the lower third and selling near the upper third of the range.
- The market is trading near the middle of the range, which can act as a balance area and a magnet.
- Traders will watch whether bears can get further follow-through selling toward the November 5 low; if there is a pullback, they will see whether bears can form a strong second leg sideways to down.
- Or will bulls produce consecutive strong bull bars reversing far above the 20-day EMA instead?
- For now, the pullback appears minor unless there is a strong breakout below the August 1 low.
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