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EURUSD High 2 Buy Setup, Bulls Need Strong Entry

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Market Overview: EURUSD Forex

The weekly chart formed a EURUSD high 2 buy setup trading slightly above the 20-week EMA. The bulls need a strong bull entry bar with follow-through buying to increase the odds of the bull leg resuming. The bears need to create a few strong consecutive bear bars closing below the 20-week EMA to increase the odds of retesting the trading range low.

EURUSD Forex market

The Weekly EURUSD chart

EURUSD Weekly: Double Bottom Bull Flag, Micro Wedge, EURUSD High 2 Buy Setup
  • This week’s candlestick on the weekly EURUSD Forex chart had a small bear body with prominent tails above and below.
  • Last week, we said that odds slightly favor the pullback to be minor even if it lasts a couple more weeks and the market to still be in the bull leg phase. 
  • The bulls want a retest of the July high followed by a continuation higher in the form of a large second leg up (with the first leg being September 2022 to July 2023 rally).
  • They see the current pullback as minor even if it lasts a few weeks. We are in the fourth week of the pullback.
  • They want the 20-week EMA to act as support, followed by a reversal from a double bottom bull flag (Dec 8 and Jan 17) and a micro wedge (Jan 5, Jan 17, and Jan 26).
  • This week traded below the 20-week EMA but reversed to close slightly above it and last week’s low.
  • The bulls will need to create a few consecutive bull bars to increase the odds of the bull leg resuming.
  • The bears see the rally since October as a retest of the prior leg’s extreme high (Jul 18).
  • They got a reversal from a wedge bear flag (Nov 3, Nov 29, and Dec 28) and a lower high major trend reversal.
  • They need to create a few strong consecutive bear bars closing below the 20-week EMA to increase the odds of retesting the trading range low. So far they have not yet been able to do so.
  • Since this week’s candlestick is a small bear bar with a prominent tail below, it is not a strong sell signal bar for next week.
  • Traders will see if the bulls can trigger the High 2 buy setup and close with a strong entry bar.
  • For now, odds slightly favor the pullback to be minor and the market to still be in the bull leg phase.
  • However, if the bears can get a few strong consecutive bear bars closing below the 20-week EMA, it can swing the odds of the bear leg beginning.
  • The EURUSD is in a 61-week trading range. Traders will continue to BLSH (Buy Low, Sell High) within a trading range until there is a breakout with follow-through selling/buying.

The Daily EURUSD chart

EURUSD Daily: Wedge, Bulls Need Consecutive Bull Bars
  • The EURUSD traded sideways to down for the week. The candlesticks for the week are mostly overlapping in a tight trading range.
  • Last week, we said that the odds slightly favor the current pullback to be minor even if it lasts another couple of weeks.
  • This week traded below last week’s low, but the follow-through selling was weak.
  • The bulls see the pullback as forming a double bottom bull flag (Dec 8 and Jan 26) and a higher low.
  • They want a reversal from a wedge bull flag (Jan 5, Jan 17, and Jan 26). 
  • They hope to get a breakout above the 61-week trading range followed by a big second leg sideways to up lasting many weeks (with the first leg being September 2022 to July 2023 rally).
  • They will need to create a few strong bull bars closing back above the 20-day EMA to increase the odds of the bull leg resuming.
  • The bears got a reversal down from a wedge pattern (Nov 6, Nov 29, and Dec 28) near the upper third of the trading range and a higher high major trend reversal (Nov 29).
  • They see the rally from October simply as a bull leg within a trading range and want a reversal from a large lower high major trend reversal (with the July high).
  • They got the third leg down this week, but the follow-through selling was not as strong as the bears hoped it would be (overlapping candlesticks).
  • If the market trades higher, the bears want the EURUSD to stall around the January 11 high and form a reversal from a double top bear flag.
  • They want at least a small second leg sideways to down to retest the Jan 26 low.
  • For now, odds slightly favor the current pullback to be minor even if it lasts another couple of weeks. This remains true.
  • However, if the bears can create sustained follow-through selling below the 20-day EMA, it could swing the odds in favor of the bear leg beginning. 

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