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EURUSD Broke Above the Bear Trendline

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Market Overview: EURUSD Forex

The EURUSD broke above the bear trendline this week. Bulls now need additional follow-through buying, trading clearly above the 20-week EMA and the bear trendline, to raise the odds of trend resumption. Bears see the current pullback (bounce) as forming a double top bear flag (Nov 13 and Dec 4) and want a larger second leg sideways to down.

EURUSD Forex market

The Weekly EURUSD chart

EURUSD Weekly - Bulls Need FT Buying, Bears Want LH, EURUSD Broke Above the Bear Trendline
  • This week’s EURUSD candlestick was a follow-through bull bar closing above the middle of its range, with a prominent tail above.
  • Last week, we said traders would watch whether bulls could form a strong bull entry bar closing well above the 20-week EMA and the bear trendline, or whether bears would push for a retest of the November 5 low.
  • Bulls succeeded in producing a decent bull entry bar that broke above the bear trendline.
  • They view the November 5 selloff as a pullback within a broader bull trend.
  • They want the November 21 retest to form a higher low or a small double bottom — and so far, it has.
  • They expect the 20-week EMA and November low to act as support, forming a large double bottom bull flag (Aug 1, Nov 5) and a wedge bull flag (Sep 25, Oct 9, Nov 5).
  • Bulls now need additional follow-through buying, trading clearly above the 20-week EMA and the bear trendline, to raise the odds of trend resumption.
  • Bears want the upper third of the multi-year trading range to act as resistance, creating a lower high relative to the January 2021 high — which remains true so far.
  • They created a pullback from a higher-high major trend reversal (Sep 17) and a wedge top (Apr 21, Jul 1, Sep 17).
  • However, the sell-off to November 5 low had overlapping bars, indicating bears are not yet decisively strong.
  • They see the current pullback (bounce) as forming a double top bear flag (Nov 13 and Dec 4) and want a larger second leg sideways to down.
  • If the market trades higher, they want it to stall below the September 17 high to form a lower high major trend reversal.
  • Bears need strong consecutive bear bars closing far below the 20-week EMA to show control.
  • The market has been in a 25-week trading range.
  • Traders may continue to Buy Low, Sell High within this range — buying near the lower third and selling near the upper third — until a clear breakout with strong follow-through occurs.
  • The market is currently around the middle of the trading range, an area of balance and a magnet.
  • Traders will watch whether bulls can generate more follow-through buying above the 20-week EMA and the bear trendline.
  • Or whether the market stalls and reverses below the 20-week EMA instead?

The Daily EURUSD chart

EURUSD Daily - Bear Want DT Bear Flag, Bulls Need FT Buying
  • EURUSD traded sideways to up for the week. Thursday pushed slightly higher but reversed into a bear bar, followed by sideways trading on Friday.
  • Previously, we said traders would watch whether bears could generate more follow-through selling and break far below the November 5 low, or whether the market would stall near that area and reverse above the 20-day EMA instead.
  • Bears created a pullback from a higher high major trend reversal and a large wedge top (Apr 21, Jul 1, Sep 17).
  • The selloff had several pushes with overlapping ranges, signalling bears are still not strong.
  • They see the current move as a two-legged pullback and want a reversal from a double top bear flag (Nov 13 and Dec 4).
  • They want another sideways-to-down leg to retest the August 1 low.
  • If the market trades higher, bears want the rally to be weak — overlapping bars, poor follow-through — and to stall below the September 17 high, forming a lower high major trend reversal.
  • Bears need strong consecutive bear bars closing near their lows, pushing far below the 20-day EMA and the August 1 low, to improve the odds of a successful reversal.
  • Bulls view the November 5 selloff as a pullback and a bear leg within a trading range.
  • They want a reversal from a large double bottom bull flag (Aug 1 and Nov 5) and a wedge bull flag (Sep 25, Oct 9, Nov 5).
  • If the market trades lower, bulls want the 20-day EMA to hold as support and form a higher low (relative to Nov 21), followed by a third leg sideways to up.
  • Bulls need strong consecutive bull bars breaking above the November 13 and October 28 highs to increase the odds of trend resumption.
  • EURUSD has been in a 128-day trading range.
  • Traders may continue to Buy Low, Sell High within the range — buying near the lower third and selling near the upper third — until a strong breakout with sustained follow-through develops.
  • The market is currently around the middle of the trading range, an area of balance and a price magnet.
  • Traders will watch whether bulls can produce more follow-through buying to break far above the November 13 and October 28 highs.
  • Or whether the market stalls and pulls back to retest the November 21 low instead?

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