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Weekly EURUSD Minor Pullback

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Market Overview: EURUSD Forex

The market is forming a weekly EURUSD minor pullback on the weekly chart. The bulls want another leg up to form the wedge pattern, with the first two legs being April 21 and July 1 highs. The bears must create strong bear bars to increase the odds of a deeper pullback.

EURUSD Forex market

The Weekly EURUSD chart

EURUSD Weekly - Bears Need FT, Bulls Want Retest High, Weekly EURUSD Minor Pullback
  • This week’s candlestick on the weekly EURUSD Forex chart was a bear bar closing around the middle of its range with long tails above and below.
  • Last week, we said traders would see if the bears could create strong follow-through selling, or if the move would be brief, lacking follow-through, and followed by a retest of the recent leg high (Jul 1) instead.
  • The market traded lower, but the small bear body and prominent tails indicate the bears are not yet as strong as they hoped for.
  • The bears see the recent move as a bull leg and a buy vacuum test of the multi-year trading range high.
  • They want a reversal from a wedge pattern (Mar 18, Apr 21, and Jul 1) and an embedded wedge (May 26, Jun 12, and Jul 1).
  • They want the upper third of the multi-year trading range or May 2021 high to act as areas of resistance and the move to form a lower high (vs May 2021).
  • They want a TBTL (Ten Bars, Two Legs) pullback lasting a few weeks.
  • They must create strong bear bars to increase the odds of a deeper pullback.
  • The bulls got a strong move up in the form of a tight bull channel.
  • They want another leg up to form the 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 current move simply as a pullback and want it to be weak (long tails below candlesticks, overlapping candlesticks, doji(s), bull bars).
  • They want a retest of the recent leg extreme high (Jul 1), followed by a continuation of the move.
  • If there is a deeper pullback, they want the 20-week EMA to act as support.
  • The move up (Jul 1) 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 pullback is relatively weaker compared to the prior leg up (May 12 to Jul 1).
  • The odds slightly favor the pullback to be minor.
  • For now, traders will see if the bears can create strong follow-through selling.
  • Or will the move lack strong follow-through selling and be followed by a retest of the recent leg high (Jul 1) in the weeks ahead instead?

The Daily EURUSD chart

EURUSD Daily - Bears Need FT, Bulls Want Retest High
  • The EURUSD traded slightly lower in the first half of the week. Wednesday reversed into an outside bull bar, but there was no follow-through buying. The market traded sideways on Thursday and Friday.
  • Last week, we said traders would see the strength of the pullback, whether it would be deep with strong follow-through selling, or if the move would be sideways with overlapping ranges instead.
  • So far, the pullback has a lot of overlapping ranges, which indicates the bears are not yet strong.
  • The bears view the recent rally as a large wedge pattern (Mar 18, Apr 21, and Jul 1) and an embedded wedge in the third leg up (May 26, Jun 12, and Jul 1).
  • They want a reversal from a higher high major trend reversal, followed by a retest of the middle of the trading range.
  • If the market trades higher, they view it as a retest of the prior trend’s extreme high (Jul 1) and want a lower high major trend reversal or a small double top.
  • 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 trading range, followed by a measured move (based on the height of the trading range), which will take the market to near the 2021 high area.
  • They want another leg up to form the larger wedge pattern, with the first two legs being April 21 and July 1 highs.
  • They view the current move as a minor pullback and hope to get a retest of the recent trend extreme high (Jul 1), followed by a resumption of the trend.
  • They want the 20-day EMA or the bull trend line to be support areas.
  • If the market forms a deeper pullback, they want a higher low and a large double bottom bull flag with the May 12 low.
  • The move up (Jul 1) was strong (in a tight bull channel) but has lasted a long time and is slightly climactic.
  • The market may have to form a pullback before the move resumes higher. The pullback phase is currently underway.
  • For now, traders will see the strength of the pullback. Will it be deep with strong follow-through selling?
  • Or will the move be sideways and weak (overlapping ranges, bull bars, doji(s), prominent tails below candlesticks)? If this is the case, the odds of a retest of the July 1 high after the pullback will increase.
  • Odds slightly favor the pullback to be minor.

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