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Eurusd Breakout below Trading Range

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Market Overview: EURUSD Forex

The EURUSD breakout below the trading range on the weekly chart. The bears want a strong breakout below the trading range low and a measured move based on the height of the trading range. The bulls want a failed breakout followed by a retest of the middle of the trading range. They want a reversal from a large double bottom bull flag (Oct 3 and Jan 2), a wedge pattern (Oct 23, Nov 22, and Jan 2) and a lower low major trend reversal.

EURUSD Forex market

The Monthly EURUSD Forex chart

EURUSD Monthly - BO Below TR, Bears Need FT Selling, Eurusd Breakout Below the Trading Range
  • The December monthly EURUSD candlestick was an inside bear bar closing in its lower half with a prominent tail below.
  • Last month, we said that traders would see if the bears could create another leg down to complete the micro wedge pattern (the first two legs being Oct 23 and Nov 22). Or if we would see more profit-taking activity around the lower third of the large trading range instead.
  • The market traded sideways to down for the month. January traded below the inside bar (Dec) and the November low.
  • The bears got a reversal from a double top bear flag (Dec 28 and Sept 25) and a larger double top bear flag (July 18 and Sept 25).
  • They want a strong breakout below the trading range (October 2023 low) followed by a measured move using the height of the trading range.
  • At a minimum, they hope to get another leg down to complete the wedge pattern with the first two legs being the October 23 and November 22 lows. The third leg down is currently underway.
  • They need to create a strong breakout below the trading range low with sustained follow-through selling trading to increase the odds of a measured move down.
  • The bulls see the current move as a sell vacuum and a bear leg within a trading range.
  • They want a failed breakout below the trading range and a reversal from a large double bottom bull flag (Oct 3 and Jan 2) and a wedge (Oct 23, Nov 22, and Jan 2).
  • While January has traded lower, they hope that the candlestick will close with a bull body and trade back into the trading range.
  • So far, the market has broken below the 25-month trading range.
  • Traders will see if the bears can create sustained follow-through selling in January.
  • Or will the market stall and reverse back into the trading range instead?
  • If the bears can get a follow-through bear bar in January, the odds of a measured move down will increase.
  • Most breakouts from trading ranges fail and odds favor the trading range to continue.
  • Poor follow-through and reversals are hallmarks of a trading range.
  • Traders will BLSH (Buy Low, Sell High) until a breakout with sustained follow-through buying/selling from either direction.

The Weekly EURUSD chart

EURUSD Weekly - Retest Low, Double Bottom, No BO Yet
  • This week’s candlestick on the weekly EURUSD Forex chart was a big bear bar closing in its lower half with a long tail below.
  • Last week, we said that traders would see if the bears could create a breakout below the November 22 low with follow-through selling or if the market would stall around the November 22 low area and trade higher instead.
  • The market broke below the November low this week.
  • The bears got another leg down creating the wedge pattern (Oct 23, Nov 22, and Jan 2).
  • They want a strong breakout below the trading range low and a measured move based on the height of the trading range.
  • They need to create sustained follow-through selling to increase the odds of lower prices.
  • If the market trades higher, they want a double top bear flag with the December 6 high.
  • The bulls see the move to the November 22 low as a sell vacuum and a bear leg within a trading range.
  • They see the move to the January 2 low as a retest of the prior leg’s extreme low.
  • They want a failed breakout followed by a retest of the middle of the trading range.
  • They want a reversal from a large double bottom bull flag (Oct 3 and Jan 2), a wedge pattern (Oct 23, Nov 22, and Jan 2) and a lower low major trend reversal.
  • They must create consecutive bull bars closing near their highs to indicate that they are back in control.
  • Since this week’s candlestick is a bear bar closing in its lower half with a long tail below, it can be a sell signal bar for next week albeit weaker.
  • Traders will see if the bears can create a follow-through bear bar following this week’s breakout below the November 22 low. If they can do that and continue to make sustained follow-through selling, the odds of a measured move down will increase.
  • Or will the market stall and form a minor pullback (bounce) in the next few weeks instead?
  • Most breakouts from trading ranges fail and odds favor the trading range to continue.
  • The market is trading around the lower third of the trading range which can be the buy zone of trading range traders.
  • The EURUSD is in a 112-week trading range. (Trading range high: July 2023, low: October 2023). 
  • Traders will BLSH (Buy Low, Sell High) within a trading range until a breakout with follow-through selling/buying.

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