Market Overview: EURUSD Forex
The EURUSD is testing the low of the trading range and the 20-month EMA. Bears need a decisive breakout below to increase the odds of a measured move down based on the height of the trading range. Bulls hope the 20-month EMA and the low of the trading range will act as support, followed by a strong bull leg.
EURUSD Forex market
The Monthly EURUSD Forex chart
- June broke below the inside bar, forming a bear bar closing in its lower half and testing the low of the trading range and the 20-month EMA.
- Last month, we said traders would watch whether bulls could retest the top of the trading range or whether bears could retest the 20-month EMA instead.
- Bulls see the 13-month trading range as a large bull flag — a 25% pullback from the January 2025 rally.
- Bulls want a trend resumption from a large double bottom bull flag (August 1 and June 24) and a smaller double bottom bull flag (March 13 and June 24).
- They hope the 20-month EMA and the low of the trading range will act as support, followed by a strong bull leg.
- Bulls need consecutive strong bull bars to demonstrate control.
- Bears want a reversal from a wedge top (July 1, September 17, January 27), a lower high major trend reversal (April 17), and a head and shoulders top (September 17, January 27, April 17).
- Bears need consecutive strong bear bars breaking decisively below the 20-month EMA and the August 1 low to increase the odds of a measured move down based on the height of the trading range.
- If the market trades higher, bears want it to stall below the April 17 high, forming a double top bear flag.
- The market formed a bear leg testing the low of the trading range.
- Traders will watch whether bears can create a strong breakout below the trading range and the 20-month EMA.
- Or will the market find support around the 20-month EMA and the low of the trading range, followed by a pullback higher in the months ahead instead?
- Until there is a decisive breakout, traders may continue to Buy Low, Sell High (BLSH), buying near the lower third and selling near the upper third of the range.
- The middle of the range can act as a magnet and an area of balance.
The Weekly EURUSD chart
- This week formed an inside bull bar closing in its upper half with prominent tails.
- Last week, we said traders would watch whether bears could generate follow-through selling over the next several weeks and break decisively below the March 13 low, or whether the market would stall around the low of the trading range, followed by a pullback to retest the middle of the range in the weeks ahead.
- Bulls view the recent move as a bear leg within the trading range, forming a large wedge bull flag (November 5, March 13, and June 24) and a trend channel line overshoot (June 24).
- Bulls want a failed breakout below the trading range, followed by a bull leg to retest the high of the trading range.
- Bulls see a two-bar reversal forming at the low of the trading range.
- They need a strong bull entry bar with sustained follow-through buying to increase the odds of testing the middle of the trading range.
- Bulls want the low of the trading range to act as support. If the market trades lower, bulls want the May 12 low to act as support.
- Bulls need consecutive strong bull bars breaking decisively above the 20-week EMA and the bear trend line to demonstrate control.
- Bears got a bear leg from a lower high major trend reversal (April 17), testing the low of the trading range.
- Bears want a reversal from a head and shoulders top (September 17, January 27, and April 17), followed by a measured move based on the height of the trading range.
- Bears view this week as a breakout pullback and want the move to remain weak and sideways, forming another lower high.
- If the market trades higher, bears want the 20-week EMA or the bear trend line to act as resistance.
- Bears need consecutive strong bear bars breaking decisively below the March 13 low, with follow-through selling, to increase the odds of reaching the measured move target.
- The market broke below the low of the trading range last week, but the breakout bar had a prominent tail below.
- The bears could not generate follow-through selling this week.
- Markets have inertia and tend to continue doing what they have been doing. About 80% of breakout attempts fail.
- Traders will watch whether bulls can generate a strong bull entry bar closing near its high.
- Or will the market retest the June 24 low instead?
- Until there is a clear breakout with strong follow-through, traders may continue to Buy Low, Sell High (BLSH), buying near the lower third and selling near the upper third of the range.
- The middle of the range is an area of balance and often acts as a magnet.
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