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EURUSD Bear Leg in a Trading Range

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Market Overview: EURUSD Forex

The market is forming a EURUSD bear leg in a trading range on the weekly chart. Bulls see a wedge bull flag (Sep 25, Oct 9, Nov 5) forming and want a strong break above the bear microchannel to resume the trend. 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 in Trading Range, EURUSD Bear Leg in a Trading Range
  • This week’s EURUSD candlestick was a bull bar closing in its upper half, with a small tail above and a long tail below.
  • Last week we said traders were watching whether bears could create consecutive bear bars closing far below the 20-week EMA (something not seen since February), or if the pullback would stay sideways with weak follow-through selling, followed by a reversal above the 20-week EMA.
  • The market traded lower in the first half of the week but reversed higher from Thursday onwards. Bears did not get sustained follow-through selling.
  • Bears want the upper third of the multi-year trading range to act as resistance, forming a lower high relative to January 2021. So far, this remains the case.
  • They are looking for a reversal from a higher-high major trend (Sep 17) and a wedge top (Apr 21, Jul 1, Sep 17).
  • The pullback is forming an 8-bar bear microchannel, showing persistent selling pressure.
  • There may 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).
  • Bears need consecutive strong bear bars closing near their lows, breaking decisively below both the 20-week EMA and the Aug 1 low, to increase the odds of a trend reversal.
  • Bulls see the current move as a pullback within a broader bull trend.
  • They want the 20-week EMA and the Aug low area to act as support, forming a large double bottom bull flag with the Aug 1 low.
  • They see a wedge bull flag (Sep 25, Oct 9, Nov 5) forming and want a strong break above the bear microchannel to resume the trend.
  • Bulls will need strong consecutive bull bars breaking decisively above the bear microchannel and the 20-week EMA to show they have regained control.
  • The market has been in a trading range for the past 21 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 a strong breakout above the 8-bar bear microchannel and the 20-week EMA.
  • Or will the market stall around the 20-week EMA, followed by more follow-through selling?
  • The move from the Sep 17 high to the Nov 5 low appears to be a bear leg within the trading range.
  • Odds slightly favor the pullback being minor for now.

The Daily EURUSD chart

EURUSD Daily - Wedge Bull Flag in Trading Range
  • The EURUSD traded lower in the first half of the week but reversed higher from Thursday onwards.
  • Previously, we said traders are watching whether bears could produce a stronger third leg sideways to down to retest the Oct 9 or Aug 1 lows, or if the market would continue stalling around the Oct 9 area, followed by a retest of the Sep 17 high in the weeks ahead.
  • The market formed the third leg sideways to down, breaking below the Oct 9 low but reversing to retest the 20-day EMA on Friday.
  • 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 need strong consecutive bear bars closing near their lows, trading far below the 20-day EMA and Aug 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 current move 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, bulls want the August 1 low to act as support.
  • They need strong consecutive bull bars closing far above the 20-day EMA and breaking above the bear trend line to increase the odds of the bull trend resuming.
  • EURUSD has been in a trading range for the past 108 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 there is a strong breakout with sustained follow-through in either direction.
  • The middle of the trading range can act as an area of balance and a magnet.
  • Traders will watch whether bulls can produce strong consecutive bull bars closing near their highs, 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 20-day EMA or Oct 28 high area, forming another lower high?
  • 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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