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No EURUSD Follow-through Selling

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Market Overview: EURUSD Forex

There was no EURUSD follow-through selling on the monthly chart in August. The bears want the bear trend line and the upper third of the multi-year trading range to be areas of resistance. The bulls view the move in July as a pullback and want a retest of the recent leg extreme high (Jul 1), followed by a strong breakout above.

EURUSD Forex market

The Monthly EURUSD Forex chart

EURUSD Monthly - No FT Selling, Bears Want Lower High, No EURUSD Follow-through Selling
  • The August monthly EURUSD candlestick was a bull bar closing in its upper half with a small tail above, testing near the July 1 high.
  • Last month, we said there could be buyers below the first pullback from the 6-bar bull micro channel. Traders would see if the bears could create a follow-through bear bar, or if the market would form a retest of the July 1 high instead.
  • Previously, the bulls had a breakout above the trading range with follow-through buying in June.
  • They want a strong breakout and a measured move based on the height of the trading range, which will take the market to the 2021 high area.
  • They view the move in July as a pullback and want a retest of the recent leg extreme high (Jul 1), followed by a strong breakout above.
  • The move up (since Jan 13 low) is in a tight bull channel, indicating persistent buying.
  • If there is a pullback, they want the August low area to act as support.
  • The bears see the rally as a bull leg and a buy vacuum test of the 2021 high.
  • They want the market to form a major lower high (vs Jan 2021 high), followed by a retest of the middle of the trading range.
  • They want the bear trend line and the upper third of the multi-year trading range to be areas of resistance.
  • They must create strong consecutive bear bars to show they are back in control.
  • Since August was a bull bar closing in its upper half, it can be a buy signal bar for September.
  • The buying pressure since the January low is stronger (tight bull channel) compared to the weaker selling pressure (bear bar with no follow-through selling).
  • The market may trade at least a little higher to retest near the July 1 high.
  • For now, traders will see if the bulls can create a retest and breakout above the July 1 high.
  • Or will the market trade slightly higher but stall around the July 1 high area instead?

The Weekly EURUSD chart

EURUSD Weekly - No FT Selling, Bulls Need Strong Bull Bars
  • This week’s candlestick on the weekly EURUSD Forex chart had a small bear body closing in its upper half with a long tail below.
  • Last week, we said the pullback (Aug 1) appears to be minor. Traders would see if the bulls could create more follow-through buying, or if the market would continue to stall below the July 24 high, followed by bear bars instead.
  • The market traded below the prior week’s low, but there was no follow-through selling (again).
  • 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.
  • The bear attempted to trade lower over the last two weeks, but in both cases, follow-through selling was limited (Aug 22 and Aug 27).
  • They must create strong consecutive bear bars to show they are back in control.
  • If the market trades higher, they want it to form a double top with the July 1 high.
  • Previously, the bulls got a strong move in a tight bull channel.
  • 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 consecutive bull bars 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 market traded below the prior week’s low, but there was no follow-through selling, like last week. The bears are not yet as strong as they had hoped.
  • Traders will see if the bulls can create strong bull bars, followed by a breakout above the July 1 high.
  • Or will the market continue to stall below the July 24 high, followed by bear bars instead?
  • 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.
  • For now, the pullback (Aug 1) appears to be minor.

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