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EURUSD Tight Channel

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Market Overview: EURUSD Forex

The weekly chart formed a EURUSD tight channel consisting of 10 consecutive bear bars. That means strong bears. Odds favor at least a small second leg sideways to down after a larger pullback. The bulls hope to get a reversal up from a parabolic wedge.

EURUSD Forex market

The Weekly EURUSD chart

EURUSD Weekly: Strong Bears, Parabolic Wedge, Climactic, EURUSD Tight Channel
  • This week’s candlestick on the weekly EURUSD Forex chart was almost a bear doji bar.
  • Last week, we said that while odds continue to slightly favor sideways to down, the move down has lasted a long time and is slightly climactic. A minor pullback can begin within a few weeks. 
  • This week traded below last week’s low but reversed to close above it.
  • The bears got a reversal from a wedge top (Feb 2, Apr 26, and Jul 18), a trend channel line overshoot and a higher high major trend reversal.
  • The move down is in a tight bear channel consisting of 10 consecutive bear bars. 
  • That increases the odds of at least a small second leg sideways to down after a pullback.
  • The bears want the pullback to be weak (overlapping bars, doji(s), bear bars) and sideways, followed by another leg down from a lower high major trend reversal.
  • The bulls hope that the current leg down is simply a deep pullback.
  • They want a reversal up from a double bottom bull flag (May 31) and a parabolic wedge (Aug 3, Aug 25, and Sept 22).
  • They see the market as still being in a broad bull channel and want the bull trend line to act as support.
  • The problem with the bull’s case is that the move down is very strong. 
  • They will need a strong bull reversal bar or at least a micro double bottom before they would think to buy more aggressively. 
  • While the market is sitting at a potential support area (bull trend line and bottom of trading range), the bulls still need to do more to prove that they are at least temporarily back in control. 
  • Since this week was a doji bar, it is a neutral bar for next week.
  • While the EURUSD continue to slightly favor sideways to down, the move down has lasted a long time and is slightly climactic. A minor pullback can begin at any moment. 
  • Any pullback would likely be minor and favor at least a small second leg sideways to down after the pullback.
  • Traders will see if the bears can maintain the tight bear channel and create a breakout below the May & March low. Or will the market begin the minor pullback phase soon?
  • If the bears continue to create strong consecutive bear bars breaking far below the May & March low, it will increase the odds of the reversal being successful.

The Daily EURUSD chart

EURUSD Daily: Parabolic Wedge, Micro Double Bottom
  • The EURUSD traded sideways for the week. Thursday and Friday traded below last week’s low but both days reversed to close as doji bars with long tails below.
  • Last week, we said that while the odds continue to slightly favor the market to trade at least a little lower, the move down has lasted a long time and is slightly climactic. A minor pullback can begin within a few weeks. 
  • The bears got a reversal from a trend channel line overshoot, a wedge top (Feb 2, Apr 26, and Jul 18) and a higher high major trend reversal.
  • They want a strong breakout below the bull trend line and the May and March low. 
  • The move down since July 18 is in a tight bear channel. That increases the odds of at least a small second leg sideways to down after a larger pullback.
  • If there is a larger pullback (bounce), the bears want a reversal down from a lower high major trend reversal.
  • The bulls hope that the recent move down is simply a deep pullback.
  • They want a larger pullback from a parabolic wedge (Aug 8, Aug 25, and Sept 22), a smaller wedge (Sept 14, Sept 14, and Sept 22) in the third leg down and a micro double bottom (Sept 21 and Sept 22).
  • They want the market to stall around the bull trend line and the May low followed by a reversal up.
  • Because of the strong move down, they will need a strong bull reversal bar or at least a micro double bottom before they would think to buy more aggressively. (Note: Thursday and Friday formed a micro double bottom).
  • While the market may still trade a little lower, the move down has lasted a long time and is slightly climactic.
  • A minor pullback can begin at any moment. If a pullback (bounce) begins, traders will see the strength of the pullback. 
  • If it is weak (overlapping bars, doji(s), bear bars) and sideways, the odds of another leg down increase.
  • For now, traders will see if the bears can create a breakout below the bull trend line and the May & March low, or will the market find buyers around the current levels beginning the minor pullback phase soon.

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