Market Overview: EURUSD Forex
The market formed a weekly EURUSD double top bear flag (Apr 9 and May 16). The bears want a reversal from a double top bear flag and a small double top (May 16 and Jun 4). If there is a deeper pullback, the bulls want a reversal from a higher low major trend reversal.
EURUSD Forex market
The Weekly EURUSD chart
- This week’s candlestick on the weekly EURUSD Forex chart was a bear bar closing near its low with a long tail below.
- Last week, we said that because of the tight bull channel, odds slightly favor the market to still be in the sideways to up phase.
- The market traded higher for most of the week but sold off on Friday, closing below the 20-week EMA.
- The bulls have a tight bull channel but have only reached a lower high.
- The breakout above the outside bar and May 16 high had no follow-through buying.
- They hope that the last 3 weeks were a pullback and want another leg up testing the March 8 high.
- If the market trades lower, they want the 20-week EMA to continue acting as support.
- If there is a deeper pullback, they want a reversal from a higher low major trend reversal.
- The bears see the recent moves simply as a deep pullback and want at least a small retest of the April 16 low (even if it forms a higher low).
- They want a reversal from a double top bear flag (Apr 9 and May 16) and a small double top (May 16 and Jun 4).
- They see this week as a failed breakout from last week’s outside doji.
- They hope to get another leg down completing the wedge pattern with the first two legs being February 14 and April 16.
- If the market trades higher, the bears want a larger double top bear flag with the March 8 high.
- They need to create consecutive bear bars trading below the 20-week EMA to convince traders that they are back in control.
- Since this week is a bear bar closing near its low, it is a sell signal bar for next week.
- The bears will need to create a follow-through bear bar following this week’s close below the 20-week EMA to increase the odds of retesting the April 16 low.
- The market is currently trading around the middle of the trading range. It is an area of balance.
- The EURUSD is in an 81-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 there is a breakout with follow-through selling/buying.
- Poor follow-through and reversals are hallmarks of a trading range.
The Daily EURUSD chart
- The EURUSD traded sideways to up for most of the week but sold off on Friday.
- Previously, we said that traders will see if the bulls can get at least a small second leg sideways to up or will the market trade slightly higher but stall around or below the May 16 high area.
- The market formed a second leg sideways to up earlier in the week but stalled around the May 16 high area followed by a big bear bar on Friday.
- Previously, the bulls got a reversal from a higher low major trend reversal and a wedge bull flag (Dec 8, Feb 14, and Apr 16).
- They see this week as a retest of the May 16 high and want a breakout above with the next target being the March 8 high.
- However, the follow-through buying following the breakout above May 16 was limited.
- If the market trades lower, they want the 20-day EMA or the bull trend line to act as support.
- If there is a deep pullback, they want a reversal from a higher low major trend reversal.
- The bears see the current move as a deep pullback forming a wedge bear flag (Apr 26, May 3, and May 16) and a double top bear flag (Apr 9 and May 16).
- They also see a small double top (May 16 and Jun 4).
- They want another leg down completing the larger wedge pattern with the first two legs being February 14 and April 16.
- At the least, they want a small retest of the April 16 low, even if it only forms a higher low.
- They need to create consecutive bear bars closing near their lows trading far below the 20-day EMA to increase the odds of the bear leg beginning.
- Since Friday was a big bear bar closing below the 20-day EMA it is a sell signal bar for next Monday.
- Traders will see if the bears can create sustained follow-through selling.
- If they do, the odds will swing in favor of a retest of the April 16 low.
- The market is currently trading around the middle of the trading range which can be an area of balance.
- Traders will continue to BLSH (Buy Low, Sell High) within a trading range until there is a breakout with follow-through selling/buying.
- Poor follow-through and reversals are hallmarks of a trading range.
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