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EURUSD Micro Double Top

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Market Overview: EURUSD Forex

The EURUSD Forex traded down in May from a EURUSD micro double top (April and May) and closed below the 20-month exponential moving average. The bears need to create follow-through selling in June to increase the odds of a deeper pullback. The bulls want the broad bull channel to continue up completing the wedge pattern with the first two legs being February 2 and April 26.

EURUSD Forex market

The Monthly EURUSD Forex chart

EURUSD Micro Double Top, March Bull Bar, Overlapping Candlesticks on Monthly Chart.
  • The May monthly EURUSD candlestick was a big bear bar closing in the lower half of its range.
  • Last month, we said that the odds will continue to slightly favor sideways to up until the bears can create strong bear bars.
  • May did not trade above April’s high and broke far below its low, closing below the 20-month exponential moving average.
  • The bears want a reversal down from a double top with the February high and a micro double top (Apr 26 and May 3).
  • Previously, the bears were not able to create follow-through selling (in March).
  • Now, they need to create a follow-through bear bar in June to increase the odds of a deeper pullback.
  • The bears will need to create consecutive strong bear bars to convince traders that they are back in control.
  • The bulls got breakouts above the February high in April and May but failed to get sustained follow-through buying.
  • They hope that the current pullback will form a higher low.
  • They want another leg up, completing the wedge pattern with the first two legs being February 2 and April 26.
  • The last 5 candlesticks have a lot of overlapping range but are sloping slightly up. The market is in a smaller broad bull channel following a bull spike from November.
  • The EURUSD is in a sideways trading range with a slight upside tilt. Traders will BLSH (Buy Low, Sell High) within the trading range.
  • Since May was a big bear bar closing near its low, it is a sell signal bar for June. June may trade slightly below May’s low.
  • The bears will need to create a follow-through bear bar to convince traders that a deeper pullback may be underway.
  • Traders will see if the bears can create a follow-through bear bar or will the market trade slightly lower but close with a long tail below or with a bull body.

The Weekly EURUSD chart

EURUSD Weekly: Weak Follow-through below 20-EMA, HL?
  • This week’s candlestick on the weekly EURUSD Forex chart was a bear 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. Traders want to see if the bears can get a follow-through bear bar following this week’s close below the 20-week EMA.
  • This week traded below last week’s low but reversed to close slightly above it and around the middle of the week’s range.
  • 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 soon.
  • If the EURUSD trades much lower, they want a reversal up from a double-bottom bull flag with the March low. 
  • The current selloff is in a tight bear channel. The bulls will need a strong reversal bar or a micro double bottom before they would be willing to buy aggressively.
  • The first pullback (bounce) would likely be minor.
  • The bears got a reversal down from a higher high major trend reversal and failed breakout above the February 2 high.
  • They have a 5-bar bear micro channel and want a retest of the March 15 low.
  • The bear doji closing around the middle of the bar means weak follow-through following last week’s break below the 20-week exponential moving average.
  • The bears hope that this week was simply a small pullback and want the tight bear channel to continue.
  • If there is a pullback, the bears want at least a small second leg sideways to down testing the current leg low (May 31).
  • For now, odds slightly favor a small second leg sideways to down after a small pullback.
  • Can the EURUSD continue down to March 15 low without a pullback? Yes, that is possible as the bears are still in control.
  • The bulls will only be willing to buy more aggressively when they have a strong signal bar such as a strong bull reversal bar or at least a micro double bottom.

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