Market Overview: EURUSD Forex
The pullback in the EURUSD stall at the 20-day EMA on the daily chart. The bears want a reversal from a small double top bear flag. The bulls want the 20-day EMA and the bull trend line to act as support and resume the bull leg higher.
EURUSD Forex market
The Weekly EURUSD chart
- This week’s candlestick on the weekly EURUSD Forex chart was an inside doji bar.
- Last week, we said that odds slightly favor the pullback to be minor even if it lasts a couple more weeks and the market is still in the bull leg phase.
- The bulls want a retest of the July high followed by a continuation higher in the form of a large second leg up (with the first leg being September 2022 to July 2023 rally).
- They see the current pullback as minor even if it lasts 1-3 weeks. We are in the second week of the pullback.
- They want the 20-week EMA to act as support, followed by a reversal from a double bottom bull flag (Dec 8 and Jan 5).
- The bears see the rally since October as a retest of the prior leg’s extreme high (Jul 18).
- They want a reversal from a wedge bear flag (Nov 3, Nov 29, and Dec 28) and a lower high major trend reversal.
- They need to create a few strong consecutive bear bars closing below the 20-week EMA to increase the odds of retesting the trading range low.
- The bears were not able to create a follow-through bear bar this week. They are not yet as strong as they hoped to be.
- They hope that this week was simply a pullback and want at least a small second leg sideways to down to test near the 20-week EMA.
- Since this week’s candlestick is an inside doji, the market is in a neutral state.
- The bulls want a breakout above, while the bears want a breakout below the inside doji. The first breakout can fail 50% of the time.
- For now, odds slightly favor the pullback to be minor even if it lasts a couple more weeks and the market to still be in the bull leg phase.
- The EURUSD is in a 59-week trading range. Traders will continue to BLSH (Buy Low, Sell High) within a trading range until there is a breakout with follow-through selling/buying.
The Daily EURUSD chart
- The EURUSD traded sideways for the week. The market remains in a tight trading range.
- Last week, we said that the odds slightly favor the current pullback to be minor even if it lasts another couple of weeks.
- Tuesday broke below the ioi (inside-outside-inside) pattern but reversed to break out above on Thursday. There was no follow-through buying on Friday.
- Previously, the bulls got a bull leg which retested the upper third of the trading range (Dec 28).
- They hope to get a breakout above the 59-week trading range followed by a big second leg sideways to up lasting many weeks.
- They see the pullback to the 20-day EMA as forming a double bottom bull flag (Dec 8 and Jan 5).
- They will need to create follow-through buying next week to increase the odds of retesting the December high.
- The bears got a reversal down from a wedge pattern near the upper third of the trading range (Nov 6, Nov 29, and Dec 28) and a higher high major trend reversal (Nov 29).
- They see the rally from October simply as a bull leg within a trading range and want a reversal from a large lower high major trend reversal (with the July high).
- The bears hope that the tight trading range is simply a pullback forming a double top bear flag (Jan 5 and Jan 11).
- They will need to create consecutive bear bars closing near their lows trading below the 20-day EMA and the bull trend line to increase the odds of a deeper pullback.
- For now, odds slightly favor the current pullback to be minor even if it lasts another couple of weeks. This remains true.
- However, if the bears can create consecutive bear bars closing near their lows and trading below the 20-day EMA, it could swing the odds in favor of the bear leg beginning. No signs of this yet.
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