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Weekly EURUSD Second Leg Sideways to Down

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Market Overview: EURUSD Forex

The market formed a weekly EURUSD second leg sideways to down to test near the June low. The bears want a retest of the April and the October lows. The bulls see the current move as a sell vacuum and a bear leg within a trading range. They want the June or April lows to act as support.

EURUSD Forex market

The Weekly EURUSD chart

EURUSD Weekly - 2nd Leg Sideways to Down, Weekly EURUSD Second Leg Sideways to Down
  • This week’s candlestick on the weekly EURUSD Forex chart was a big outside bear bar closing in its lower half with a small tail below.
  • Last week, we said sellers may be above the first pullback following the strong 5-bar bear microchannel. Traders would see if the bears could create a strong retest and breakout below the August low and the bull trend line or if the market would stall around that area instead.
  • The market traded higher in the first half of the week testing the 20-week EMA but reversed sharply lower on Wednesday.
  • The bears wanted sellers above the first pullback (from the 5-bar bear microchannel) and the 20-week EMA to act as resistance. They got what they wanted.
  • They got a strong bear leg testing the near the June low and breaking below the bull trend line.
  • Next, the bears want a retest of the April and the October lows.
  • They need to create more follow-through selling following this week’s breakout below the bull trend line to increase the odds of testing the trading range low.
  • The bulls want the market to form a higher low, followed by a retest of the September 25 high.
  • They see the current move as a sell vacuum and a bear leg within a trading range.
  • They want the June or April lows to act as support.
  • They hope to get a failed breakout below the bull trend line. They hope to get a reversal from a wedge pattern (Oct 10, Oct 17, and Nov 6) and a large double bottom bull flag (Jun 26 and Nov 6).
  • They must create consecutive bull bars closing near their highs to indicate that they are back in control.
  • Since this week’s candlestick is a big outside bear bar closing in its lower half, it is a sell signal bar for next week.
  • The market may still trade slightly lower to test the June low area.
  • Traders will see if the bears can create a strong follow-through bear bar or if the market will trade slightly lower but reverse to close with a long tail or a bull body instead.
  • Sometimes, the candlestick following an outside bar is an inside bar or has a lot of overlapping price action.
  • The market is trading near the lower third of the trading range which can be the buy zone of trading range traders.
  • The EURUSD is in a 104-week trading range. (Trading range high: July 2023, low: October 2023). 
  • Traders will BLSH (Buy Low, Sell High) within a trading range until a breakout with follow-through selling/buying.
  • That means buying in the lower third and selling near the upper third of the large trading range.

The Daily EURUSD chart

EURUSD Daily - 2nd Leg Sideways to Down
  • The EURUSD traded higher in the first half of the week but reversed sharply lower on Wednesday. Thursday was an inside bar pullback followed by some follow-through selling on Friday.
  • Previously, we said that the move down had lasted a long time and was climactic. The odds slightly favor a minor pullback (testing near the 20-day EMA), followed by at least a small second leg sideways to down after that.
  • The bulls see the current move as a sell vacuum and a bear leg test of the June low.
  • They see the market as being in a broad bull channel.
  • They want the pullback to form a higher low followed by a retest of the September 25 High.
  • They want a reversal from a lower low major trend reversal (Nov vs Oct), a wedge pattern (Oct 4, Oct 23, and Nov 6) and a micro double bottom (Nov 6 and Nov 8).
  • They hope the June or April lows will act as support.
  • They must create consecutive bull bars closing near their highs to indicate that they are back in control.
  • The bears expected at least a small second leg sideways to down after a larger pullback. They got what they wanted.
  • The next targets for the bears are the June and April lows.
  • If there is a pullback, they want the 20-day EMA or the bear trend line to act as resistance followed by a reversal from a double top bear flag (with the Nov 6 high).
  • So far, the bear leg is strong but also slightly climactic.
  • The market may still trade slightly lower (probably testing the June low area).
  • Traders will see if the bears can get a strong retest and breakout below the June low.
  • Or will the market trade slightly lower but stall around the June or April lows area instead?
  • The lower third of the large trading range can be the buy zone of trading range traders.
  • Traders will continue to BLSH (Buy Low, Sell High) within a trading range until a breakout with follow-through selling/buying.

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