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EURUSD Pullback Stalled at 20-Week EMA

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Market Overview: EURUSD Forex

The EURUSD Forex market pullback stalled at the 20-week exponential moving average (EMA) for the last 3 weeks. The bulls want a larger second leg sideways to up to retest February high from a higher low major trend reversal and a double bottom bull flag with January 6 low. The bears need to create consecutive bear bars trading far below the 20-week exponential moving average to convince traders that a retest of the September low is underway.

EURUSD Forex market

The Weekly EURUSD chart

EURUSD Weekly: Pullback Stalled at 20-Week EMA
  • This week’s candlestick on the weekly EURUSD Forex chart was an outside bull doji closing above the middle of its range.
  • Last week, we said that traders will see if the bears can get a strong break below the 20-week EMA or will the bulls get a follow-through bull bar.
  • This week traded below the 20-week EMA but reversed to close with a small bull body.
  • The last 3 candlesticks are mostly overlapping and stalling around the 20-week EMA.
  • The bears got a reversal down testing the 20-week EMA from a wedge top (Nov 15, Dec 5 and Feb 2).
  • They wanted a 2-legged sideways-to-down pullback lasting at least a few weeks. The bears have gotten what they wanted.
  • The next targets for the bears are the January 6 low and the November 21 low. 
  • So far, they have not been able to create follow-through selling below the 20-week EMA.
  • The bears need to create consecutive bear bars trading far below the 20-week EMA to convince traders that a retest of the September low is underway.
  • If the EURUSD trades higher, they want a reversal down from a lower high major trend reversal or a double top with the February high.
  • The bulls got a strong spike and channel up from September 2022 and the market may have flipped into Always In Long. 
  • The strong move up increases the odds of at least a small second leg sideways to up after the current pullback. 
  • They hope to get a reversal up from a double bottom bull flag with January 6 low.
  • They want the 20-week exponential moving average to act as support, and it has been so.
  • Since this week was a bull doji closing above the middle of the bar, it is a weaker buy signal bar for next week.
  • The bulls need to create follow-through buying to increase the odds of a retest of the February 2 high.
  • If the EURUSD trades lower next week, the bulls want it to reverse up to close with a bull body or a long tail below again.
  • For now, if the bears do not create strong follow-through selling below the 20-week EMA within a few weeks, the market will then do the opposite and attempt to retest February high instead.
  • Traders will see if the bears can get a strong break below the 20-week EMA or will the bulls get a follow-through bull bar.

The Daily EURUSD chart

EURUSD Daily: Wedge, Trading Range, HL MTR
  • The EURUSD traded sideways below the 20-day exponential moving average for the last 17 candlesticks.
  • Previously, we said that odds slightly favor the EURUSD to trade at least a little lower and traders will see if the bears can create consecutive bear bars closing near their lows or will the EURUSD trade slightly lower but reverse higher from around the January 6 low area.
  • While the EURUSD has traded slightly lower, the bears have not yet been able to create sustained follow-through selling.
  • The bears see the move up since September as a 50% pullback of the selloff which started in May 2021.
  • They got a pullback with 3 pushes testing January 6 low (therefore a wedge – Feb 27, Mar 1 and Mar 6) but did not follow-through selling.
  • The next targets for the bears are the January 6 low and the November 21 low which was the start of the bull channel.
  • If the EURUSD trades higher, they want a reversal down from a lower high major trend reversal or a double top with the February high.
  • The bears need to create consecutive bear bars closing near their lows trading far below the January 6 low to convince traders that a retest of the September low could be underway.
  • The bulls got a strong spike & channel up from October.
  • The move up was strong enough to have flipped the market into Always In Long. 
  • The bulls want a larger second leg sideways to up to retest February high from a higher low major trend reversal and a double bottom bull flag with January 6 low.
  • They also see a wedge bull flag (Feb 7, Feb 24 and Mar 8).
  • Since Friday was a bull bar with a long tail above, it is a weaker buy signal bar.
  • The EURUSD is trading around the middle of the 3-week trading range just under the 20-day exponential moving average. It is not an ideal buy setup.
  • Traders will BLSH (Buy Low, Sell High) until there is a breakout with follow-through from either direction.
  • For now, traders will see if the bears can create strong follow-through selling breaking far below the 3-week trading range.
  • If they continue failing to do so, odds will swing in favor of a retest of the February high within a couple of weeks.

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