EURUSD bear breakout below 2017 low

Market Overview: EURUSD Forex

EURUSD bear breakout on weekly candlestick below the 7-year trading range. Bears want a measured move down based on the 7-year trading range height, which will take them to the year 2000 low. Bulls want a failed breakout below the trading range and hope that the 10-week trading range is the final flag of the whole move down since 2021.

EURUSD Forex market

The Weekly EURUSD chart

• This week’s candlestick on the weekly EURUSD Forex chart was a big bear breakout bar with a long tail below. It was a breakout below the 7-year trading range.
• Last week, we said that traders still need more information, therefore more bars. Traders will continue to BLSH (Buy Low, Sell High) until there is a strong breakout from the 10-week trading range.
• Bears wanted a retest of the 2017 low followed by a strong breakout and a measured move down based on the height of the 7-year trading range. They got the breakout this week.
• A measured move down based on the height of the 7-year trading range will take them to the year 2000 low.
• If the bears get at least 2 strong bear bars closing below the 2017 low, odds of a breakout and a measured move increase. 
• That means, if the bears get another follow-through bear bar next week, especially on that closes near the low, odds of more sideways to down increases.
• The bulls hope the sell-off since March was a sell vacuum test of the 7-year trading range low. 
• The bulls want a reversal higher from a wedge bottom (Mar 4, May 13 and July 8).
• However, they have not been able to create sustained follow-through buying.
• The bulls hope that the 10-week trading range is the final flag of the move down which started in 2021. They want a failed breakout below the 7-year trading range.
• The move down is in a tight bear channel. That means strong bears. 
• Next week will be an important week as traders will see whether the bears can create follow-through selling.
• Since this was a big bear bar, it is a sell signal bar for next week. However, the long tail below makes it a weaker sell signal bar. Odds slightly favor sideways to down.
• However, if next week is a bull bar, especially if it has a big bull body and closes near the high, odds of a failed breakout below the 7-year trading range and a reversal higher from a potential final flag increase.

The Daily EURUSD chart

• The EURUSD broke below the 10-week trading range on Tuesday with follow-through selling on Wednesday and Thursday.
• Friday traded lower but reversed up to close as a bull reversal bar with a long tail below.
• Previously, we said should the EURUSD continue to stall around or below the May high or around the 20-day exponential moving average, odds are the bears will return to sell the double top bear flag or lower high. 
• The EURUSD stalled at the 20-day exponential moving average and the bears sold the wedge bear flag (June 16, June 22 and June 27) and got the bear breakout they wanted.
• The bears want a measured move down based on the height of the 7-year trading range. That would take them to the year 2000 low.
• The move down this week was strong enough for traders to expect at least a small second leg sideways to up.
• There is a 10-bar bear micro channel which means strong bears.
• The bulls hope that the 10-week trading range is the final flag of the move down since 2021.
• They want a failed breakout below the 7-year trading range and a reversal higher from a wedge bear flag (Mar 4, May 13 and July 8).
• Friday was a bull reversal bar, but it had a small bull body. It is a High 1 buy signal bar for Monday. However, it followed a 10-bar bear micro channel. It is a less reliable buy signal bar.
• The bull will need at least a micro double bottom or a stronger bull reversal bar, one with a bigger bull body closing near the high before they would be willing to buy aggressively.
• If the bulls start getting consecutive bull bars closing near their highs, the odds of a failed breakout increase.
• For now, odds slightly favor at least a small second leg sideways to down after a pullback.

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