Market Overview: EURUSD Forex
The market formed a weekly EURUSD bull breakout above the trading range. The bulls need to create sustained follow-through buying to confirm the breakout. The bears want a failed breakout followed by a retest of the middle of the trading range. They must create strong bear bars to show they are back in control.
EURUSD Forex market
The Weekly EURUSD chart
- This week’s candlestick on the weekly EURUSD Forex chart was a big bull bar closing in its upper half with a prominent tail above.
- Last week, we said traders would see if the bulls could continue to create follow-through buying to retest near the August/September highs area, or if the market would stall around the upper third of the trading range and form bear bars in the weeks ahead instead.
- The bulls got a retest and breakout above the top of the trading range (Aug/Sep and July highs).
- They 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.
- Since this week’s breakout was above the trading range, the bulls need to create sustained follow-through buying to confirm the breakout.
- They want any pullback to be weak and sideways (overlapping candlesticks, doji(s), bull bars, long tails below candlesticks).
- 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 must create strong bear bars to show they are back in control.
- So far, the move up (since the February 18 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 changes and tend to continue.
- Since the market broke above the trading range, traders want to see if the bulls can create follow-through buying.
- Or will the market start to stall and trade back into the trading range instead?
- If the bulls can create strong follow-through buying, the odds of a successful breakout will increase.
- For now, the market may still be in the sideways to up phase.
The Daily EURUSD chart
- The EURUSD traded higher for the week. Friday broke out above the trading range closing the candlestick with a long tail above.
- Previously, we said the move to the March 18 high could still be a bull leg and a buy vacuum within the trading range. The move up was strong enough for traders to expect at least a small sideways to up leg after a pullback.
- The bulls got a large second leg sideways to up in the last 2 weeks.
- They 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.
- They must create sustained follow-through buying to increase the odds of a measured move up.
- The current move is strong enough for traders to expect at least a small sideways to up leg to retest the April 11 high.
- If there is a pullback, they want it to be weak and sideways (overlapping candlesticks, doji(s), prominent tails below candlesticks).
- If there is a deeper pullback, they want the 20-day EMA 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 need to create strong consecutive bear bars to show that they are back in control.
- So far, 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.
- However, if the bulls can create sustained follow-through buying in the next few weeks, the odds of a successful breakout and a measured move will increase.
- The move up has been strong enough for traders to expect at least a small sideways to up leg to retest the current leg extreme high (now Apr 11 high) after a pullback.
- For now, the market may still be in the sideways to up phase.
- Traders will see if the bulls can create more follow-through buying above the trading range.
- Or will the market stall and form a pullback into the trading range instead?
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