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EURUSD Breakout Below the Trading Range

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Market Overview: EURUSD Forex

The market formed a EURUSD breakout below the trading range this week. The bears want follow-through selling and a measured move down based on the height of the trading range. The bulls want a failed breakout and the trading range low to act as support followed by a retest of the middle of the trading range.

EURUSD Forex market

The Weekly EURUSD chart

EURUSD Weekly - Breakout Below Trading Range Low, EURUSD Breakout Below the Trading Range
  • This week’s candlestick on the weekly EURUSD Forex chart was a bear bar closing in its lower half with long tails below and above.
  • Last week, we said the market may still trade slightly lower to test the October low area. Traders will see if the bears can create a strong follow-through bear bar and a breakout below the trading range low.
  • The bears got another follow-through bear bar and a breakout below the trading range low. The long tail below this week’s candlestick indicates a weaker breakout bar.
  • They want follow-through selling and a measured move down based on the height of the trading range.
  • Because of the strong leg down (from Sept), the bears expect to get (at least) a small sideways to down leg to retest the current extreme low (now Nov 22) after a pullback.
  • The bulls see the current move as a sell vacuum and a bear leg within a trading range.
  • They want a failed breakout and the trading range low to act as support 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 Nov 22).
  • They must create consecutive bull bars closing near their highs to indicate that they are back in control.
  • Until they can do that, traders will not be willing to buy aggressively.
  • Since this week’s candlestick is a bear bar closing in its lower half, it is a sell signal bar for next week albeit weaker (long tail below).
  • The move down is strong with big bear bars covering many pips and a micro gap.
  • Odds slightly favor the market to still be in the sideways to down phase even if there is a pullback.
  • Traders will see if the bears can create follow-through selling below the trading range low.
  • Or will we see some profit taking around the current levels?
  • Most breakouts from the trading ranges fail and odds favor the trading range to continue.
  • However, if the bears can create sustained follow-through selling, the odds of a successful breakout and a measured move increase.
  • The market is trading around the trading range low which can be the buy zone of trading range traders.
  • The EURUSD is in a 106-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.

The Daily EURUSD chart

EURUSD Daily - BO Below TR, Parabolic Wedge
  • The EURUSD traded sideways to up in the first half of the week. Wednesday traded higher but reversed into an outside bear bar with follow-through selling on Thursday. Friday broke below the trading range low but closed with a long tail below.
  • Last week, we said the market may still trade at least a little lower to test the trading range low area. Because of the strong move down, odds favor at least a small second leg sideways to down after a pullback.
  • The bulls see the current move as a sell vacuum and a bear leg testing the trading range low.
  • They want a reversal from a large double bottom bull flag (Oct 3 and Nov 22) and a parabolic wedge (Nov 6, Nov 14, and Nov 22) followed by a reversal to the middle of the trading range.
  • They want a failed breakout and hope that the trading range low will act as support.
  • They must create consecutive bull bars closing near their highs to indicate that they are back in control.
  • The bears got a strong second leg sideways to down breaking below the trading range low.
  • The move down is in a tight bear channel. That means strong bears.
  • Next, the bears want follow-through selling and a measured move down based on the height of the trading range.
  • If there is a pullback, the bears expect to get at least a small second leg sideways to down to retest the current leg extreme low (now Nov 22) after a larger (two-or-three-legged) pullback.
  • They want the 20-day EMA or the bear trend line to act as resistance.
  • So far, the bear leg is strong.
  • The move down while strong, may still only be a sell vacuum within a trading range. Most breakouts from trading ranges fail and odds favor the trading range to continue.
  • However, if the bears create sustained follow-through selling, the odds of a successful breakout and a measured move down will increase.
  • For now, the market remains in the sideways to down phase and favor at least a small second leg sideways to down after a pullback.
  • Traders will see if the bears can create follow-through selling below the trading range.
  • Or will buyers appear around the trading range lows instead?
  • The low of the large trading range can be the buy zone of trading range traders.
  • Traders will continue to BLSH (Buy Low, Sell High) within a trading range until a breakout with follow-through selling/buying.

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