Brooks Trading Course

Learn to Trade Price Action Consistently

 

More results...

EURUSD Minor Pullback

By

Market Overview: EURUSD Forex

The EURUSD Forex formed a minor pullback following a 5-bar bear microchannel. Often, there are sellers above the first pullback from such a strong bear microchannel. The bulls hope to get at least a retest of the April high after the current pullback. They want the 20-week exponential moving average to act as support. 

EURUSD Forex market

The Weekly EURUSD chart

EURUSD Weekly: Minor Pullback Following 5-Bar Bear Microchannel
  • This week’s candlestick on the weekly EURUSD Forex chart was a bull doji with tails above and below. 
  • Last week, we said that the odds slightly favor a small second leg sideways to down after a small pullback.
  • This week traded above last week’s high but closed below it.
  • The bulls hope to get at least a retest of the April high after the current pullback.
  • They want the 20-week exponential moving average to act as support. 
  • They hope the EURUSD will reverse back above the 20-week exponential moving average (20-EMA) soon. 
  • While this week traded above the 20-EMA, the market reversed to close slightly below it.
  • The bulls will need to create follow-through buying trading far above the 20-week exponential moving average to increase the odds of higher prices.
  • If the EURUSD trades much lower, they want a reversal up from a double-bottom bull flag with the March low. 
  • The bears got a reversal down from a higher high major trend reversal and failed breakout above the February 2 high.
  • The move down was in a 5-bar bear microchannel. That means strong bears. 
  • There are often sellers above the first pullback from such a tight bear microchannel.
  • The bears want a retest of the March 15 low. They hope that this week was simply a minor pullback and want at least a small second leg sideways to down, testing the current leg low (May 31).
  • Since this week’s candlestick is a bull doji, it is a buy signal bar albeit weaker. 
  • However, it is following a tight bear channel down. It is not an ideal buy setup.
  • Traders will see if the bulls can create a follow-through bull bar closing above the 20-week exponential moving average or will the market stall around the 20-EMA and sellers sell the first pullback from a tight bear channel.
  • For now, odds slightly favor a small second leg sideways to down after the current pullback.

The Daily EURUSD chart

EURUSD Daily: Double Top Bear Flag, Minor PB
  • The EURUSD traded sideways earlier in the week but pushed higher on Thursday. Friday was an inside bear bar reversing back below the 20-day exponential moving average.
  • Previously, we said that while the tight channel down means strong bears, the selloff is also slightly climactic. There may be a minor pullback followed by a second leg sideways to down retesting the current leg low.
  • The minor pullback (bounce) started from the March 31 low and is currently underway.
  • The bears got a tight bear channel down from the May high. That means persistent bears.
  • The selloff is strong enough for traders to expect at least a small second leg sideways to down after the current pullback.
  • They want a retest of the March low from a double-top bear flag (Jun 2 and Jun 8). 
  • At the very least, the bears want a retest of the current leg low (May 31).
  • They hope Thursday and Friday formed a micro double top and want a breakout below Friday’s inside bear bar.
  • The bulls hope that the current pullback will form a higher low. 
  • They want another strong leg up completing the wedge pattern with the first two legs being February 2 and April 26.
  • At the very least, they want a retest of the prior leg extreme high (April 26).
  • They want a reversal up from a parabolic wedge (May 15, May 19, and May 31) and a higher low major trend reversal (Jun 6).
  • If the EURUSD trades much lower, they want a reversal up from a larger double-bottom bull flag with the March low.
  • The bulls need to create consecutive bull bars trading far above the 20-day exponential moving average to increase the odds of a retest of the April High.
  • Since Friday was an inside bear bar, the EURUSD is in breakout mode. The bulls want a breakout above while the bears want a breakout below the inside bar.
  • Because it is a bear bar closing near its low, odds slightly favor a breakout below the inside bar.
  • The first breakout from an inside bar can fail 50% of the time.
  • For now, odds slightly favor at least a small leg to retest May 31 Low after the current pullback (bounce).

Market analysis reports archive

You can access all weekend reports on the Market Analysis page.

>