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EURUSD 7-Bar Bull Microchannel

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Market Overview: EURUSD Forex

The market formed a EURUSD 7-bar bull microchannel on the weekly chart which means persistent buying. The bulls must create strong follow-through buying above the April 21 high to increase the odds of a successful breakout.The bears see the current move forming a wedge pattern (Mar 18, Apr 21, and Jun 27) and a higher high major trend reversal.

EURUSD Forex market

The Weekly EURUSD chart

EURUSD Weekly - 7-Bar Bull MC, Bulls Need FT Buying, EURUSD 7-Bar Bull Microchannel
  • This week’s candlestick on the weekly EURUSD Forex chart was a bull bar closing near its high with a small tail above.
  • Last week, we said traders would see if the bulls could create more follow-through buying trading above the April 21 high, or if the bears would be able to form strong bear bars in the weeks ahead instead.
  • The market opened slightly lower followed by sideways to up trading for the whole week.
  • The bears see the current move forming a wedge pattern (Mar 18, Apr 21, and Jun 27) and a higher high major trend reversal.
  • They also see an embedded wedge in the current leg up (May 26, Jun 12, and Jun 27).
  • They want a failed breakout followed by a retest of the middle of the trading range.
  • They must create strong bear bars with sustained follow-through selling to show they are back in control.
  • The bulls want a strong breakout and a measured move based on the height of the trading range. That would take the market to the 2021 high area.
  • They want another big leg up to complete the wedge pattern, with the first two legs being March 18 and April 21. The third leg is currently underway.
  • The current leg is in a 7-bar bull microchannel which means persistent buying. There may be buyers below the first pullback.
  • They must create strong follow-through buying above the April 21 high to increase the odds of a successful breakout.
  • If there is a pullback, they want the 20-week EMA to act as support, forming a double bottom bull flag (with May 12 low).
  • The move is in a tight bull channel with stronger buying pressure (big bull bars, consecutive bull bars) vs weaker selling pressure (bear bars with limited follow-through selling).
  • The current leg up is in a 7-bar bull microchannel which means persistent buying. There may be buyers below the first pullback.
  • Most breakouts from trading ranges fail. Markets have inertia and tend to continue what they have been doing.
  • However, if the bulls can create strong follow-through buying above the April 21 high, that would increase the odds of a successful breakout and a measured move.
  • For now, traders will see if the bulls can create more follow-through buying above the April 21 high.
  • Or will the market stall and form some bear bars in the weeks ahead instead?

The Daily EURUSD chart

EURUSD Daily - Bulls Need FT Buying, Bears See Wedge
  • The EURUSD opened at the 20-day EMA but there was no follow-through selling. The market traded higher and broke above the April 21 high with follow-through buying.
  • Last week, we said traders would see if the bulls could create strong follow-through buying trading above the April 21 high, or if the market would stall around the April 21 high followed by a TBTL (Ten Bars, Two Legs) pullback instead.
  • The bears see the current move forming a large wedge pattern (Mar 18, Apr 21, and Jun 27) and an embedded wedge in the third leg up (May 26, Jun 12, and Jun 27).
  • They want a reversal from a higher high major trend reversal.
  • They want a failed breakout followed by a retest of the middle of the trading range.
  • They must create strong consecutive bear bars trading far below the 20-day EMA to show they are back in control.
  • The bulls want a strong breakout above the April 21 high, followed by a measured move based on the height of the trading range. That would take the market to near the 2021 high area.
  • They want the third leg up to complete the large wedge pattern, with the first two legs being March 18 and April 21. The third leg up is currently underway.
  • If the market trades lower, they want the 20-day EMA or the bull trend line to be support areas, forming a large double bottom bull flag with the May 12 low.
  • They must create sustained follow-through buying above the April 21 high to increase the odds of a successful breakout and a measured move.
  • So far, the move up from the May 12 low has overlapping ranges which indicates the bulls are not as strong as the prior legs up.
  • The move is in a tight bull channel with bear bars having limited follow-through selling which means stronger bulls.
  • Markets have inertia, and odds slightly favor the trading range to continue.
  • However, if the bulls can create sustained follow-through buying over the next few weeks, the odds of a successful breakout and a measured move will increase.
  • For now, traders will see if the bulls can create more follow-through buying trading above the April 21 high.
  • Or will the market stall and form a pullback instead?

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