Market Overview: EURUSD Forex
The market formed a monthly EURUSD double top bear flag (July 18 and Sept 25). The bulls see the current move as a pullback and a retest of the breakout point. They want the bull trend line or the 20-month EMA to act as support followed by a retest of the recent leg high (Sep 25). The bears They want a reversal from a double top bear flag (Dec 28 and Sept 25) and from around the top of the large trading range. They also see a larger double top bear flag (July 18 and Sept 25).
EURUSD Forex market
The Monthly EURUSD Forex chart
- The September monthly EURUSD candlestick was a bull bar with a prominent tail above closing above the middle of its range.
- Last month, we said that traders would see if the bulls can create a follow-through bull bar to test the trading range high or if the market would form a bear bar to test the middle of the trading range instead.
- September was a follow-through bull bar albeit weaker (prominent tail above). It traded slightly above the August high but closed below it.
- The bulls got a breakout above the triangle to retest the December 28 high and some follow-through buying in September.
- They see the current move as a pullback and a retest of the breakout point.
- They want the bull trend line or the 20-month EMA to act as support followed by a retest of the recent leg high (Sep 25).
- They want the monthly candlestick to close with a long tail or a bull body.
- The bears see the recent move as a buy vacuum test of the trading range high.
- They want a reversal from a double top bear flag (Dec 28 and Sept 25) and from around the top of the large trading range.
- They also see a larger double top bear flag (July 18 and Sept 25).
- They hope to retest the middle of the trading range (around the 20-month EMA).
- So far, the market remains in a 22-month trading range.
- While the bulls got some follow-through buying in September, they have not yet been able to create a strong breakout above the December high.
- For now, traders will see if the bears can create strong bear bars with follow-through selling.
- Or will the current move be a pullback, and the monthly candlestick reverses to close with a long tail or a bull body by the end of the month?
- The market was trading around the upper third of the large trading range (around the Aug/Sep highs area) which can be the sell zone of trading range traders.
- Poor follow-through and reversals are hallmarks of a trading range.
- Traders will BLSH (Buy Low, Sell High) until a breakout with sustained follow-through buying/selling from either direction.
The Weekly EURUSD chart
- This week’s candlestick on the weekly EURUSD Forex chart was a big bear bar closing near its low.
- Last week, we said that traders would see if the bull could create a breakout above the August high or if the market would stall around the August 23 high area and form some bear bars instead. The upper third of the large trading range can be the sell zone of trading range traders.
- The market formed a pullback testing the 20-week EMA.
- The bulls broke out above the August 23 high (in September) but lacked follow-through buying.
- They see this week as a pullback and retest of the breakout point.
- They want the market to form a higher low, followed by a retest of the September 25 high.
- They want the bull trend line or the 20-week EMA to act as support.
- The bears see the recent bull leg as a buy vacuum test of the trading range high (Dec or July).
- They got a reversal from around the upper third of the large trading range from a double top bear flag (Dec 28 and Aug 23), a higher high major trend reversal (Sep vs Aug) and a small double top (Aug 23 and Sep 25).
- They hope that this will lead to the start of the bear leg.
- They must create strong follow-through selling trading below the 20-week EMA to increase the odds of a bear leg.
- Since this week’s candlestick is a bear bar closing near its low, it is a sell signal bar for next week.
- Odds slightly favor the market to trade a little lower.
- Traders will see if the bears can create a follow-through bear bar closing below the 20-week EMA. If the bears can create strong follow-through selling, it will increase the odds of testing the bottom of the triangle.
- Or will the market trade lower but reverse to close with a long tail or a bull body instead?
- The EURUSD is in a 99-week trading range. (Trading range high: July 2023, Trading range low: Oct 2023).
- Traders will continue to BLSH (Buy Low, Sell High) within a trading range until a breakout with follow-through selling/buying.
- Poor follow-through and reversals are hallmarks of a trading range.
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