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Weekly EURUSD Wedge Bull Flag

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Market Overview: EURUSD Forex

The market is forming a weekly EURUSD wedge bull flag within a trading range. The bulls want the 20-week EMA and the August low area to act as support, forming a large double bottom bull flag (Aug 1 and Nov 5). If the market trades higher, bears want it to form a lower-high major trend reversal relative to Sep 17.

EURUSD Forex market

The Weekly EURUSD chart

EURUSD Weekly - Wedge Bull Flag, Bulls Need FT Buying, Weekly EURUSD Wedge Bull Flag
  • This week’s EURUSD candlestick was a bull bar closing in its upper half, with a small tail above.
  • Last week, we said traders would watch whether bulls could create a strong breakout above the 8-bar bear microchannel and the 20-week EMA, or if the market would stall around the 20-week EMA and see more follow-through selling.
  • The market broke above the 8-bar bear microchannel and closed above the 20-week EMA.
  • Bulls see the recent move (Nov 5) as a pullback within a broader bull trend.
  • They want the 20-week EMA and the August low area to act as support, forming a large double bottom bull flag (Aug 1 and Nov 5).
  • They also see a wedge bull flag (Sep 25, Oct 9, Nov 5) and want a strong break above the bear microchannel to resume the trend.
  • Bulls will need follow-through buying over the next several weeks to increase the odds of testing the recent trend extreme high (Sep 17).
  • Bears want the upper third of the multi-year trading range to act as resistance, forming a lower high relative to January 2021 — which remains the case so far.
  • They are looking for a reversal from a higher-high major trend reversal (Sep 17) and a wedge top (Apr 21, Jul 1, Sep 17).
  • The recent pullback formed an 8-bar bear microchannel, showing persistent selling pressure.
  • There could be sellers above the first pullback from this bear microchannel.
  • If the market trades higher, bears want it to form a lower-high major trend reversal relative to Sep 17.
  • They want the market to reverse below the 20-week EMA, followed by a larger second leg sideways to down.
  • The market has been in a trading range for the past 22 weeks.
  • Traders may continue to Buy Low, Sell High (BLSH) within this range — buying near the lower third and selling near the upper third — until there is a clear breakout with follow-through in either direction.
  • For now, traders will watch if bulls can create follow-through buying above the 20-week EMA.
  • Or will the market trade slightly higher but stall and reverse below the 20-week EMA instead?
  • The move from the September 17 high to the November 5 low appears to be a bear leg within the trading range.
  • Odds slightly favor the pullback (Nov 5) being minor for now.

The Daily EURUSD chart

EURUSD Daily - Wedge Bull Flag, Bulls Need FT Buying
  • The EURUSD traded sideways to up for the week. Friday formed a small inside bear bar pullback.
  • Last week, we said traders would watch whether bulls could produce strong consecutive bull bars closing near their highs (above the 20-day EMA and the bear trend line), or if the market would stall around the 20-day EMA or the Oct 28 high, forming another lower high.
  • The market traded higher, testing near the October 28 high in the form of an 8-bar bull microchannel and breaking above the bear trend line.
  • Bears created a pullback from a higher-high major trend reversal and a large wedge top (Apr 21, Jul 1, Sep 17).
  • The move consisted of three pushes, forming a wedge bull flag (Sep 25, Oct 9, Nov 5).
  • They see the current move as a pullback and want a reversal from a double top bear flag (Oct 28 and Nov 13).
  • They want a retest of the November 5 low, even if it only forms a higher low.
  • They need strong consecutive bear bars closing near their lows, trading far below the 20-day EMA and the August 1 low, to increase the odds of a successful reversal.
  • If the market trades higher, bears want it to stall below the September 17 high, forming a lower-high major trend reversal.
  • Bulls see the recent move (Nov 5) as a pullback forming a large double bottom bull flag (Aug 1 and Nov 5) and a wedge bull flag (Sep 25, Oct 9, Nov 5).
  • They want a retest of the September 17 high, followed by a resumption of the bull trend.
  • If the market trades lower, they want it to form a higher low (relative to Nov 5), followed by a second leg sideways to up.
  • They need strong consecutive bull bars closing far above the 20-day EMA and the bear trend line to increase the odds of the bull trend resuming.
  • EURUSD has been in a trading range for the past 113 trading days.
  • Traders may continue to BLSH (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 occurs in either direction.
  • The middle of the trading range can act as an area of balance and a magnet.
  • The move up from the November 5 low is an 8-bar bull microchannel, increasing the odds of at least a small second leg sideways to up after a small pullback.
  • Traders will watch whether bulls can produce more follow-through buying above the 20-day EMA and the bear trend line. If they do, the odds of a retest of the September 17 high increase.
  • Or will the market stall around the October 28 high area, followed by a retest of the November 5 low?
  • For now, the move from the September 17 high to the November 5 low appears to be a bear leg within a trading range and a minor pullback.

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