Market Overview: EURUSD Forex
The market formed a EURUSD test middle of the trading range this week. The bulls want the August 1 low or the bull trend line to act as support. The bears hope the bear leg has started. If there is a pullback, the bears want at least a small second leg sideways to down to retest the current leg low (now Oct 17).
EURUSD Forex market
The Weekly EURUSD chart
- This week’s candlestick on the weekly EURUSD Forex chart was a bear bar closing slightly below the middle of its range with a long tail below.
- Last week, we said that traders would see if the bears could create another follow-through bear bar or if the market would trade slightly lower but stall around the October 10 low area and form a pullback higher instead.
- The market traded lower testing the middle of the large trading range.
- The bears got a follow-through bear bar following last week’s close below the 20-week EMA.
- 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 the bear leg has started. If there is a pullback, the bears want at least a small second leg sideways to down to retest the current leg low (now Oct 17).
- Previously, the bulls broke out above the August 23 high (in September) but lacked follow-through buying.
- They see the current move as a deep pullback and the market as being in a broad bull channel.
- They want the market to form a higher low, followed by a retest of the September 25 high.
- If the market trades lower, they want the August 1 low or the bull trend line to act as support.
- Since this week’s candlestick is a bear bar with a long tail below, it can be a sell signal bar for next week albeit weaker.
- However, the market is trading around the middle of the trading range. It is an area of balance.
- 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.
- For now, traders will see if the bears can create another follow-through bear bar testing the August low and the bull trend line.
- Or will the market form a pullback higher in the next few weeks instead?
- Odds slightly favor at least a small second leg sideways to down after a pullback.
- The EURUSD is in a 101-week trading range. (Trading range high: July 2023, low: October 2023).
- Poor follow-through and reversals are hallmarks of a trading range.
The Daily EURUSD chart
- The EURUSD traded lower for the week with Friday closing as an inside bull bar near its high.
- Last week, we said that traders would see if the bull could create a pullback towards the 20-day EMA or if the market would form a second leg sideways to down towards the middle of the trading range after a pullback.
- The market continued lower in the tight bear channel testing the middle of the trading range.
- The bulls see the current move as a deep pullback (possibly two-legged) following a wedge pattern (Jul 17, Aug 23, and Sep 25) and a double top (Aug 23 and Sep 25).
- 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 parabolic wedge.
- If the market trades lower, they want the August 1 low or the bull trend line to act as support.
- They must create consecutive bull bars closing near their highs to indicate that they are back in control.
- The bears got a reversal from a large double top bear flag (Dec 28 and Aug 23), a wedge pattern (Jul 17, Aug 23, and Sep 25) and a small double top (Aug 23 and Sep 25), around the upper third of the large trading range.
- The move down is in a tight bear channel with the current leg having a 9-bar bear microchannel. That means persistent selling.
- The bears expect at least a small second leg sideways to down after a pullback.
- The market is trading around the middle of the trading range which is an area of balance.
- The tight bear channel means strong bears. However, the move which started on September 30 has lasted a long time and is slightly climactic.
- We may see a pullback (probably testing near the 20-day EMA), followed by at least a small second leg sideways to down within a few weeks.
- For now, the August 1 low or the bull trend line is close enough and may need to be tested before we see bears take profit aggressively.
- Traders will see if the market will continue lower to test the August low or the bull trend line area.
- Or will the market stall around the August low area followed by a pullback towards the 20-day EMA in the weeks ahead?
- 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.
- Poor follow-through and reversals are hallmarks of a trading range.
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