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Weekly EURUSD 5-Bar Bull Microchannel

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Market Overview: EURUSD Forex

The market formed a weekly EURUSD 5-bar bull microchannel from the November 21 low. If the market trades lower, bulls want the 20-week EMA to act as support, followed by at least a small sideways-to-up leg to retest the December 16 high. Bears view the current bounce (Dec 16) as a retest of the prior trend extreme high and want it to stall below the September 17 high to form a lower high major trend reversal.

EURUSD Forex market

The Weekly EURUSD chart

EURUSD Weekly - Bulls Want 2nd Leg Up, Bears Want LH MTR, Weekly EURUSD 5-Bar Bull Microchannel
  • This week’s EURUSD candlestick was a bear bar closing near its low with a long tail above.
  • Last week, we said traders would watch whether bulls could generate follow-through buying toward the September 17 high, or whether the market would stall and retest the 20-week EMA.
  • The market traded higher early in the week but lacked sustained follow-through buying.
  • Bulls created a retest of the recent trend extreme high (Sep 17), forming a lower high on December 16.
  • Bulls view the November 5 selloff as a pullback within a broader bull trend.
  • The move up from the November 21 low formed a 5-bar bull microchannel; buyers may appear below its first pullback.
  • If the market trades lower, bulls want the 20-week EMA to act as support, followed by at least a small sideways-to-up leg to retest the December 16 high.
  • Bulls need a strong retest and breakout above the September 17 high to resume the bull trend.
  • Bears want the upper third of the multi-year trading range to act as resistance, creating a lower high relative to the January 2021 high, which remains the case so far.
  • They created a pullback from a higher-high major trend reversal (Sep 17) and a wedge top (Apr 21, Jul 1, Sep 17), but the November 5 selloff had overlapping bars, indicating bears are not yet decisively strong.
  • They view the current bounce (Dec 16) as a retest of the prior trend extreme high and want it to stall below the September 17 high to form a lower high major trend reversal.
  • Bears need strong consecutive bear bars breaking well below the 20-week EMA to demonstrate control.
  • The market has been in a 27-week trading range.
  • 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 market is currently trading slightly above the middle of the trading range, which can act as an area of balance and a magnet.
  • Traders will watch whether bears can produce follow-through selling toward the 20-week EMA, or whether buyers step in below the 5-bar bull microchannel.
  • For now, the market may still be in a sideways-to-up phase.

The Daily EURUSD chart

EURUSD Daily - Bulls Want 3rd Leg Up, Bears Want LH MTR
  • EURUSD traded higher on Tuesday but reversed to close near its low with a long tail above. The market then traded sideways to down from midweek onward.
  • Last week, we said traders would watch whether bulls could generate follow-through buying to break far above the October 17 high, or whether the market would stall and pull back to the 20-day EMA.
  • Bears view the current rally as a retest of the prior trend extreme high and want it to stall below the September 17 high, forming a lower high major trend reversal.
  • They want the October 1 or October 17 high to act as resistance, forming a double top bear flag (Oct 1 and Dec 16), followed by another sideways-to-down leg to retest the August 1 low.
  • Bears need strong consecutive bear bars closing near their lows and trading well below the 20-day EMA and the bull trend line to show they are back in control.
  • Bulls got a reversal from a large double bottom bull flag (Aug 1 and Nov 5) and a wedge bull flag (Sep 25, Oct 9, Nov 5).
  • Bulls want a strong retest and breakout above the September 17 high to resume the bull trend.
  • They see the current move (Dec 19) as a pullback and want it to be weak, with poor follow-through selling, followed by a third sideways-to-up leg forming the wedge pattern (the first two legs were Dec 4 and Dec 16).
  • If the market trades lower, bulls want the 20-day EMA and the bull trend line to hold as support.
  • Bulls need strong consecutive bull bars breaking above the October 17 and October 1 highs to increase the odds of a breakout above the September 17 high.
  • EURUSD has been in a 138-day trading range.
  • Until there is a strong breakout with sustained 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 market is currently trading slightly above the middle of the trading range, which can act as an area of balance and a price magnet.
  • Traders will watch whether bears can create follow-through selling below the 20-day EMA, or whether the pullback remains weak, stalls around the 20-day EMA, and leads to another sideways-to-up leg instead.

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