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Weekly EURUSD Strong Bear Leg

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Market Overview: EURUSD Forex

The market formed a weekly EURUSD strong bear leg testing the August low. Bears need a strong breakout below the August low with sustained follow-through selling to increase the odds of a successful breakout. If the market breaks below the trading range low, bulls hope the move will be brief and lack follow-through selling, resulting in a failed breakout.

EURUSD Forex market

The Weekly EURUSD chart

EURUSD Weekly - Testing the August Low, Sell Vacuum
  • This week’s EURUSD candlestick was a follow-through bear bar closing near its low with a long tail above.
  • Last week, we said traders would watch whether bears could generate follow-through selling to break below the November low, or whether the market would stall around the lower third of the trading range.
  • The market traded higher early in the week but reversed and closed below the November low by Friday.
  • Bulls see the current move as a sell vacuum test of the trading range low.
  • They want the August low area to act as support.
  • If the market breaks below the trading range low, bulls hope the move will be brief and lack follow-through selling, resulting in a failed breakout.
  • Bulls need consecutive strong bull bars to show they have regained control.
  • Bears got a reversal from a wedge top (July 1, September 17, and January 27) and a trend channel line overshoot (January 27).
  • The current bear leg consists of a 5-bar bear microchannel and a micro gap (this week’s high did not reach the low of the bull inside bar two bars earlier), which is a sign of bearish strength.
  • Bears want a strong breakout below the 39-week trading range, followed by a measured move based on the height of the range, which would project to the May 12 low area.
  • They need a strong breakout below the August low with sustained follow-through selling to increase the odds of a successful breakout.
  • If the market trades higher, bears want the 20-week EMA to act as resistance, forming a lower high followed by a second leg sideways to down.
  • The market may have flipped into Always In Short.
  • Price remains within the 39-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.
  • The market is testing near the low of the trading range.
  • Traders will watch whether bears can generate a strong breakout with sustained follow-through selling below the August low, or whether any breakout attempt will be brief and stall around the trading range low.

The Daily EURUSD chart

EURUSD Daily - Testing the August Low, Sell Vacuum
  • EURUSD formed an outside bull bar on Monday, but there was no follow-through buying. The market reversed and closed below the November low by Friday.
  • Last week, we said traders would watch whether bears could generate further follow-through selling toward the November or August lows, or whether the market would stall around the November low area, followed by a retest of the 20-day EMA in the weeks ahead.
  • Bears got a reversal from a higher high major trend reversal and a lower high major trend reversal on February 10.
  • The current bear leg has relatively small pullbacks. The pullback on March 10 did not reach the February 19 low, creating a gap. The subsequent move down from the March 10 high formed consecutive bear bars closing near their lows, with micro gaps indicating bearish strength.
  • The next target for bears is the August low, followed by a strong breakout below it.
  • Bears want a strong breakout below the 39-week trading range, followed by a measured move based on the height of the range, which would project to the May 12 low area.
  • Bears need consecutive strong bear bars breaking far below the August low to increase the odds of a measured move down.
  • If the market trades higher, bears want the 20-day EMA or the March 10 high to act as resistance, forming a lower high and a double top bear flag.
  • Bulls want the August low to act as support.
  • They see the current move as a sell vacuum test of the trading range low.
  • If the market breaks below the trading range, bulls hope the move will be brief and lack follow-through selling, resulting in a failed breakout.
  • Bulls see three consecutive sell climaxes (February 2, March 3, and March 13) and hope to get at least a two-legged sideways to up pullback to the 20-day EMA.
  • Bulls need consecutive strong bull bars to show they have regained control.
  • The market may have flipped into Always In Short.
  • EURUSD remains in a 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.
  • Traders will watch whether bears can generate a strong breakout with sustained follow-through selling below the August low, or whether the market trades below the August low but stalls around that area, followed by a retest of the 20-day EMA in the weeks ahead.
  • If the market trades higher, traders will watch the strength of the move—whether it is strong (consecutive bull bars closing near their highs) or weak, with overlapping candlesticks and prominent upper tails stalling below the March 10 high or near the 20-day EMA.

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