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EURUSD Pullback but Reversed into Bull Bar

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Market Overview: EURUSD Forex

EURUSD Forex pullback slightly on the weekly chart but reversed into bull bar. The bears failed to get follow-through selling. The move-up is in a tight bull channel. That means strong bulls. Odds continue to favor the EURUSD to trade at least a little higher. Because of the strong move up, the bears will need a strong reversal bar or at least a micro double top before they would be willing to sell aggressively. 

EURUSD Forex market

The Weekly EURUSD chart

EURUSD Pullback but Reversed into Bull Bar
  • This week’s candlestick on the weekly EURUSD Forex chart was a bull bar with a long tail below and a prominent tail above.
  • Last week, we said that while we may see some pullback, odds continue to favor the EURUSD to still be in the larger sideways to up pullback phase.
  • The EURUSD traded below last week’s low but reversed into a bull bar closing in the upper half of the week’s range.
  • The bulls hope that the 10-week trading range (July to Sept) is the final flag of the selloff. 
  • They got a reversal higher from a wedge bottom (May 13, July 14 and Sept 28) and a trend channel line overshoot. 
  • They want a failed breakout below the 7-year trading range. This week closed back above the 7-year trading range low following last week’s pullback.
  • The bulls see the last 2 week simply as a pullback and hope to get another strong leg up.
  • Previously, the bulls kept failing to get sustained follow-through buying since 2021.
  • Since the September low, the bull has created bigger bull bodies and closes near their highs with follow-through buying, while the bear bars are weak with no follow-through selling. It is a change in the market’s character.
  • The bulls need to create more consecutive bull bars closing near their highs, breaking far above the major bear trend line to increase the odds that the selloff has ended. 
  • The bears want a reversal lower from a lower high around the major bear trend line. 
  • They then want a retest of the September low followed by a breakout and a measured move down based on the height of the 7-year trading range. This will take them to the year 2000 low.
  • The bears hope the EURUSD is forming a failed breakout above a wedge bear flag (Oct 4, Oct 27, and Nov 11). 
  • If next week trades higher, they want the EURUSD to reverse lower from a double top bear flag (with Jun 27 or May 30 high) or around the major bear trend line.
  • They see the current move up as a breakout test of the 7-year trading range low.
  • Because of the strong move up, the bears will need a strong reversal bar, or at least a micro double top before they would be willing to sell aggressively.
  • Since this week was a bull bar closing in the upper half of the range, it is a buy signal bar for next week.
  • The bull bars in the last 9 weeks are bigger with closes near their highs as compared with the weak bear bars with poor follow-through selling. The move-up is in a tight bull channel.
  • For now, odds continue to slightly favor the EURUSD to trade at least a little higher.
  • Next week, traders will see if the bulls get a follow-through bull bar or if the EURUSD trades higher but reverses into a bear bar or has a long tail above.

The Daily EURUSD chart

EURUSD Daily: Small PB, Double Top
  • Monday resumed the pullback from last week. The EURUSD then reversed to retest near November 15 high by Thursday. Friday pulled back slightly but reversed to close as a bear doji.
  • Last week, we said that the move up from Nov 3 is in a tight bull channel. That increases the odds of at least a small second leg sideways to up after a pullback. The bulls got it this week.
  • The bulls want a failed breakout below the 7-year trading range. 
  • They hope that the 10-week trading range pullback (July to Sept) is the final flag of the move down which started in February. 
  • The bulls got a reversal higher from a wedge bottom (May 13, July 14 and Sept 28) and trend channel line overshoot following a sell climax.
  • Since 2021, they were not able to create sustained follow-through buying. However, the current spike up is a change in the market’s character. 
  • The bulls manage to create consecutive bull bars closing near their highs in a tight bull channel.
  • They hope that the market has flipped into Always In Long.
  • If there is a deeper pullback, the bulls want a reversal higher from a higher low major trend reversal.
  • The bears see the recent spike up as a buy vacuum breakout test of the 7-year trading range.
  • They want a reversal lower from a double top bear flag (Aug 10 or Jun 27 or May 30) and a smaller double top (Nov 15 and Nov 25) following a parabolic wedge (Nov 8, Nov 11, and Nov 15).
  • Bear then want a retest of the September low followed by a strong breakout and a measured move down based on the height of the 7-year trading range. That would take them to the year 2000 low.
  • The move-up is in a tight bull channel. That means strong bulls. 
  • They will need to create strong consecutive bear bars closing near their lows to increase the odds of a retest of the September low.
  • The bull bars this week were smaller as compared with the recent spike-up. It is a loss of momentum from the bulls.
  • For now, odds slightly favor the EURUSD to trade at least a little higher.
  • The parabolic wedge and double top increase the odds of a deeper pullback within 1 to 3 weeks. 
  • However, odds are the pullback would lead to a higher low major trend reversal and the EURUSD would still be in the larger sideways to up pullback phase.

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