Market Overview: EURUSD Forex
The EURUSD bears need follow-through selling below the 20-week EMA and the November 5 low to demonstrate control. 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. Bulls want a higher low relative to November 5 or a double bottom bull flag.
EURUSD Forex market
The Weekly EURUSD chart
- This week’s EURUSD candlestick was a bear bar closing near its low, with a long tail above, and closed below the 20-week EMA.
- Last week, we said traders would watch whether bears could produce follow-through selling below the 20-week EMA, or whether buyers would step in after the pullback below the 7-bar bull microchannel to retest the December 24 high.
- The market traded higher early in the week but lacked sustained follow-through buying, then moved sideways to down.
- Bulls retested the prior trend extreme high (September 17), forming a lower high on December 24.
- They see the current move as a pullback forming another leg in a developing wedge bull flag (first two legs: August 1 and November 5).
- They want the pullback to remain weak and sideways, with limited follow-through selling (overlapping candlesticks and long tails below bars).
- 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.
- Bulls want a higher low relative to November 5 or a double bottom bull flag.
- Bears want the upper third of the multi-year trading range to act as resistance, maintaining a lower high relative to the January 2021 high, which remains the case so far.
- Bears view the December 24 pullback as a retest of the prior trend extreme high and want a lower high major trend reversal.
- Bears need strong consecutive bear bars breaking well below the 20-week EMA and the November 5 low to demonstrate control.
- The market has been in a 31-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 often acts as a balance area and magnet.
- Traders will monitor whether bears generate further follow-through selling below the 20-week EMA.
- Or will the pullback stall around the 20-week EMA in the weeks ahead 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 higher on Monday to test the 20-day EMA, followed by a second leg sideways to down for the remainder of the week.
- Last week, we said traders would watch whether bears could get further follow-through selling toward the November 5 low; if there were a pullback, they would see whether bears could form a strong second leg sideways to down, or whether bulls could produce consecutive strong bull bars reversing far above the 20-day EMA.
- Bears see the December 24 rally as a retest of the prior trend extreme high and got a reversal from a lower high major trend reversal.
- They want a reversal from 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 therefore expect at least a small second leg sideways to down after a pullback, which occurred this week.
- If the market trades higher, bears want a lower high relative to the December 24 high. They want either the January 12 or January 6 highs to act as resistance, forming a double top bear flag with the pullback.
- 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.
- They see the current move as another leg in a developing wedge bull flag (first two legs: August 1 and November 5).
- Bulls want the pullback to form a higher low or a double bottom bull flag relative to the November 5 low.
- They see the current leg as forming three pushes and therefore a wedge (January 5, January 9, and January 16) and hope to get at least a small retest of the December 24 high, even if it forms a lower high.
- Bulls need strong consecutive bull bars trading above the 20-day EMA to show control.
- EURUSD has been in a 156-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 often acts as a balance area and 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 the January 12 or January 6 highs act as resistance.
- 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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