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EURUSD Bull Micro Channel

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Market Overview: EURUSD Forex

EURUSD bull micro channel (7 bars) formed on the weekly chart. That means strong bulls. Odds slightly favor buyers below the first pullback below such a strong bull micro channel. The bears hope that the move up is simply a buy vacuum test of the February 2 trading range high. The bears would wait for a strong break of the minor bull trend line and retest the leg extreme high, forming a major trend reversal before looking for a credible short. 

EURUSD Forex market

The Monthly EURUSD Forex chart

EURUSD Bull Micro Channel Follow-through Bull Bar, 2nd Leg Up on Monthly Chart
  • The April monthly EURUSD candlestick was a bull bar closing slightly below the February high with a prominent tail above.
  • Last month, we said that odds slightly favor April to trade at least a little above March high.
  • The bears want a reversal down from a double top with February high.
  • They hope that the current move is simply a retest of the February high within the 4-month trading range.
  • The problem with the bear’s case is that the buying pressure since the October low is stronger with bull bars closing near their highs while the only bear bar had no follow-through selling.
  • The bears will need to create consecutive strong bear bars to convince traders that they are back in control.
  • The bulls got a reversal higher from a failed breakout below the February low.
  • April was a follow-through bull bar following last month’s close above the 20-month exponential moving average.
  • The move up since the October low is in a tight bull channel. That means persistent buying. The market may have flipped into Always In Long.
  • With April closing near its high, odds slightly favor May to trade at least a little above April’s high.
  • The bulls want another strong leg up lasting a couple of months testing around the January/February 2022 high.
  • For this, they need to create consecutive bull bars breaking far above February 2 high.
  • The last 4 month’s candlesticks are overlapping sideways. The EURUSD is in a sideways trading range. Traders will BLSH (Buy Low, Sell High) within the trading range.
  • Because of the stronger buying pressure since October (bull bars closing near their highs) and weak selling pressure (single bear bar with no follow-through selling), odds slightly favor a breakout attempt above the 4-month trading range in May.
  • Traders will see if May successfully break far above February high with follow-through buying or will the EURUSD close as a bear bar or with a long tail above instead.
  • Until the bears can create strong bear bars, odds will continue to slightly favor sideways to up.

The Weekly EURUSD chart

EURUSD Weekly: Weak BO above Iniside Bar, 7-Bar Bull Microchannel
  • This week’s candlestick on the weekly EURUSD Forex chart was a bull doji with a long tail above.
  • Last week, we said that the EURUSD is in a breakout mode and the bulls want a breakout above while the bears want a breakout below the inside bar.
  • This week was a breakout above the inside bar, but it was not a strong breakout.
  • The move up since March 15 is in a tight bull channel and the bulls have a 7-bar EURUSD bull micro channel. That means strong bulls.
  • The first pullback below such a strong bull micro channel often has buyers below.
  • The bulls want a strong breakout above February 2 high and another strong leg up, possibly retesting February 2022 highs.
  • For that, they need to create follow-through buying breaking far above the February 2 high.
  • The current move up is strong enough for traders to expect at least a small second leg sideways to up after a pullback.
  • The bears want a reversal down from a higher high major trend reversal. 
  • They see a wedge (Mar 23, Apr 14 and Apr 26) and a micro double top (Apr 14 and Apr 26). 
  • They want a failed breakout above the February 2 high and a retest of the March 15 low. 
  • The bears hope that the strong move up is simply a buy vacuum retest of the February 2 high.
  • The problem with the bear’s case is that the current move-up is in a tight bull channel and they have not been able to create any strong bear bars.
  • While this week formed a micro double top (Apr 14 and Apr 26) and closed in the lower half therefore a sell signal bar for next week, it is not a good sell setup since it is following a tight 7-bar bull micro channel.
  • The bears would wait for a strong break of the minor bull trend line and retest the leg extreme high, forming a major trend reversal before looking for a credible short. A Low 2 has a better probability of leading to at least a scalp profit.
  • The wedge and micro double top increase the odds that we may see a minor pullback begin at any moment.
  • If there is a pullback, odds slightly favor buyers below the first pullback from such a strong bull micro channel.
  • EURUSD is in a trading range between 1.1 and 1.05. Traders will BLSH (Buy Low, Sell High) within the trading range until there is a strong breakout above with follow-through buying.
  • Odds will continue to slightly favor sideways to up until the bears can create credible selling pressure (consecutive bear bars closing near their lows with follow-through selling).

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