Market Overview: EURUSD Forex
The market formed a weekly EURUSD bear leg in the form of a 6-bar bear microchannel. The bears hope that the bear leg to retest the trading range low is underway. The bulls want the market to form a higher low, followed by a retest of the September 25 high. They want the August 1 low or the bull trend line to act as support.
EURUSD Forex market
The Weekly EURUSD chart
- This week’s candlestick on the weekly EURUSD Forex chart was a bear bar closing in its lower half with a small tail below.
- Last week, we said that traders would see if the bears could create another follow-through bear bar testing the August low and the bull trend line or if the market will form a pullback higher in the next few weeks instead.
- The bears got another follow-through bear bar testing the August low and the bull trend line.
- The move down is in a 6-bar bear microchannel which means strong selling.
- They hope that the bear leg to retest the trading range low is underway.
- 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 25).
- The bulls 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.
- They want the August 1 low or the bull trend line to act as support.
- They need to create bull bars with follow-through buying to increase the odds of the bull leg beginning.
- Since this week’s candlestick is a bear bar closing in its lower half, it can be a sell signal bar for next week.
- The market remains Always In Short. If there is a pullback, odds slightly favor at least a small second leg sideways to down.
- For now, traders will see if the bears can create another follow-through bear bar trading below the August low and the bull trend line.
- Or will the market stall around the August low or the bull trend line area instead?
- The EURUSD is in a 102-week trading range. (Trading range high: July 2023, low: October 2023).
- 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.
- The middle of the trading range is an area of balance.
The Daily EURUSD chart
- The EURUSD traded down in the first half of the week. Thursday’s candlestick was a pullback bull bar but lacked sustained follow-through buying on Friday.
- Last week, we said that 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 would see if the market will continue to trade lower or if the market would stall around the August low area followed by a pullback towards the 20-day EMA in the weeks ahead.
- The bulls see the current move as a sell vacuum and a bear leg test of the August low and the bull trend line.
- 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 (Oct 10, Oct 17, and Oct 23).
- They hope the August 1 low or the bull trend line will 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) and a wedge pattern (Jul 17, Aug 23, and Sep 25), around the upper third of the large trading range.
- The move down is in a tight bear channel. That means persistent selling.
- The bears expect at least a small second leg sideways to down to retest the leg extreme low after a larger pullback.
- So far, the tight bear channel means strong bears.
- The odds slightly favor sideways to down trading and favor at least a small second leg sideways to down after a pullback.
- However, the move which started on September 30 has lasted a long time and is slightly climactic.
- We may see a minor pullback (probably testing near the 20-day EMA), followed by at least a small second leg sideways to down after that.
- 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.
- The middle of the trading range is an area of balance.
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