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EURUSD sideways at wedge bottom pullback

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Market Overview: EURUSD Forex

The EURUSD Forex broke below the 2017 low with follow-through selling recently. The bulls want a reversal higher from a wedge bottom pullback (Mar 4, May 13 and July 14 wedge) and a trend channel line overshoot. However, the move down is in a tight bear channel. That means strong bears. Odds slightly favor lower prices for the EURUSD after a larger pullback.

EURUSD Forex market

The Weekly EURUSD chart

EURUSD Forex Weekly Chart Pullback Sideways to Up. Wedge bottom pullback.
  • This week’s candlestick on the weekly EURUSD Forex chart was a bull bar with a prominent tail above. 
  • Last week, we said that the sell-off has been climactic and the wedge bottom and trend channel line overshoot increases the odds of at least a small sideways to up pullback beginning within 1-3 weeks before the EURUSD continue lower. This week was the wedge bottom pullback.
  • The bears want a strong breakout below the 2017 low and a measured move down based on the height of the 7-year trading range which will take them to the year 2000 low.
  • We have said if the bears get at least 2 strong bear bars closing below the 2017 low, the odds of a breakout and a measured move increase. They got that recently.
  • The move down is in a tight bear channel. That means strong bears. Odds slightly favor lower prices for the EURUSD after a larger pullback.
  • The bulls hope the sell-off since March was a sell vacuum test of the 7-year trading range low. 
  • They want a reversal higher from a wedge bottom (Mar 4, May 13 and July 14) and a trend channel line overshoot.
  • The bulls hope that the recent 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 bulls will need to create a consecutive bull bar next week to increase the odds of a test back into the potential 10-week final flag.
  • For now, odds are the EURUSD is in the two-legged sideways to up pullback phase.

The Daily EURUSD chart

EURUSD Forex Daily Chart Sideways to Up Pullback
  • The EURUSD traded higher from Monday to Tuesday but stalled around the 20-day exponential moving average for the rest of the week.
  • Last week, we said that the wedge bottom and trend channel line overshoot increases the odds of at least a small 2-legged sideways to up pullback beginning within 1-3 weeks. The pullback begun last week.
  • 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. 
  • The bulls want a reversal higher from a wedge bottom pullback (Mar 4, May 13 and July 14 wedge) and a trend channel line overshoot.
  • They will need to create consecutive bull bars closing near their highs to increase the odds of a failed breakout.
  • The 20-day exponential moving average and bear trend line are resistances above.
  • 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 since July is in a tight bear channel. That means strong bears. Traders expect at least a small second leg sideways to down after a larger pullback.
  • Bears want the pullback to be more sideways and stall around the 20-day exponential moving average or the bear trend line.
  • Since Friday was a doji bar with a long tail below following a tight channel up from July 17 Low, it is a weak sell signal bar for Monday.
  • For now, the EURUSD may still be in the two-legged sideways to up pullback phase.
  • Traders expect at least a small second leg sideways to down to re-test the July 14 low after the pullback. 

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