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EURUSD Bears Want a Failed Breakout

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Market Overview: EURUSD Forex

The EURUSD bears want a failed breakout above the trading range. They must create a strong bear entry bar to increase the odds of a failed breakout. The bulls want any pullback to be weak, sideways, and lacking in follow-through selling.

EURUSD Forex market

The Weekly EURUSD chart

EURUSD Weekly - Bears Want Failed BO, Bulls Need FT Buying, EURUSD Bears Want a Failed Breakout
  • This week’s candlestick on the weekly EURUSD Forex chart was a bear doji closing in its lower half with a long tail above.
  • Last week, we said the market may still be sideways to up phase. Traders would see if the bulls can create more follow-through buying or if the market would start to stall and trade back into the trading range in the next few weeks instead.
  • The market traded higher early in the week but lacked follow-through buying. The EURUSD traded sideways to down for the rest of the week.
  • The bulls want a strong breakout followed by a measured move based on the height of the trading range. That would take the market to the 2021 high area.
  • They must create sustained follow-through buying to increase the odds of a measured move-up.
  • They want any pullback to be weak, sideways, and lacking in follow-through selling (overlapping candlesticks, doji(s), bull bars, long tails below candlesticks).
  • They want the August/September and July highs to act as support.
  • The bears see the current move as a large 2-legged bull leg and a buy vacuum test of the trading range high.
  • They want a failed breakout followed by a retest of the middle of the trading range.
  • They want a reversal from a wedge pattern (Apr 3, Apr 11, and Apr 21).
  • They see this week’s candlestick as a reversal bar albeit weaker (small bear body). They must create a strong bear entry bar to increase the odds of a failed breakout.
  • The move up (since the February 28 low) is in a tight bull channel with big bull bars which means strong bulls.
  • Most breakouts from trading ranges fail. Markets have inertia and tend to continue what they have been doing.
  • That means trading ranges (and trends) are resistant to change and tend to continue.
  • Traders want to see if the bears can create a strong bear entry bar.
  • Or will the market trade slightly lower, but lack follow-through selling, closing with a long tail or a bull body instead?
  • If the bears can create strong consecutive bear bars back into the trading range instead, the odds of a failed breakout will increase.
  • However, if the bulls can create strong follow-through buying above the trading range, the odds of a successful breakout and a measured move will increase.

The Daily EURUSD chart

EURUSD Daily - Bears Want Failed BO, Need FT Selling
  • The EURUSD traded higher on Monday followed by sideways to down for the rest of the week.
  • Last week, we said the market may still be sideways to up phase. Traders would see if the bulls could create more follow-through buying above the trading range, or if the market would stall and form a pullback into the trading range instead.
  • The bulls want a strong breakout above the trading range followed by a measured move based on the height of the trading range. That would take the market to near the 2021 high area.
  • If there is a pullback, they want it to be weak, sideways, and lacking in follow-through selling (overlapping candlesticks, doji(s), prominent tails below candlesticks).
  • They want the 20-day EMA or the August/September or the July highs to act as support.
  • They must create sustained follow-through buying above the trading range to increase the odds of a successful breakout and measured move-up.
  • The bears see the current move as a large 2-legged bull leg and a buy vacuum test of the trading range high.
  • They want a failed breakout followed by a retest of the middle of the trading range.
  • They want a reversal from a wedge pattern (Mar 18, Apr 3, and Apr 21) and a final flag.
  • The bears need to create strong follow-through selling trading back into the trading range to increase the odds of a failed breakout.
  • The move up since the February 28 low has been strong, with big consecutive bull bars and relatively small pullbacks.
  • The move could still be a bull leg and a buy vacuum within the trading range.
  • Markets have inertia and odds slightly favor the trading range to continue.
  • For now, traders will see if the bears can create strong consecutive bear bars trading back into the trading range and below the 20-day EMA.
  • Or will the pullback be weak and sideways? If this is the case, the odds of another leg up after the pullback increases.
  • The bulls need to create sustained follow-through buying above the trading range to increase the odds of a successful breakout and a measured move.

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