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EURUSD Strong Bears

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Market Overview: EURUSD Forex

The weekly chart is in a tight bear channel which means EURUSD strong bears. Because of the strong move down, odds slightly favor a second leg sideways to down after a pullback. The bulls want a reversal up from a wedge bull flag. They will need to create strong bull bars with follow-through buying to convince traders that they are at least temporarily back in control.

EURUSD Forex market

The Monthly EURUSD Forex chart

EURUSD Monthly: Wedge Top or Wedge Bull Flag?
  • The August monthly EURUSD candlestick was a bear bar closing in the lower half of its range.
  • Last month, we said that odds slightly favor the market to still be in the broad bull channel phase and traders will see if the bulls can continue to create follow-through buying or will the market stall and reverse lower from a wedge top.
  • August traded below July’s low but closed slightly above it.
  • The bears want a reversal down from a wedge top (Feb 2, Apr 26, and Jul 18), a trend channel line overshoot and a higher high major trend reversal.
  • Previously, the bears were not able to create follow-through selling (in March and June).
  • They will need to create follow-through selling in September to increase the odds of a reversal down.
  • The bulls want a reversal up from a wedge bull flag (Mar 15, May 31, and Aug 25) followed by a strong leg up lasting a few months.
  • They want the 20-month exponential moving average (EMA) to act as support.
  • They hope the market will form a higher low and reverse up like the prior two pullbacks in March and June.
  • August’s candlestick was a bear bar closing in the lower half. It is a sell signal bar for September.
  • While the market may still be Always In Long, the move up since September 2022 has lasted a long time.
  • The market may need to trade sideways to down to work off the overbought condition.
  • For now, odds slightly favor the EURUSD to trade at least a little lower.
  • Traders will see if the bears can create a follow-through bear bar in September.
  • If they get that, the odds of a deeper pullback or a reversal will increase.
  • Or will the market trade slightly lower, but reverse with a long tail or a bull body (around May or March low perhaps?), forming a wedge bull flag?

The Weekly EURUSD chart

EURUSD Weekly: Tight Bear Channel, Strong Bears
  • This week’s candlestick on the weekly EURUSD Forex chart was almost an outside bear bar closing near its low with a long tail above.
  • Last week, we said that the EURUSD may still trade at least a little lower and odds slightly favor at least a small second leg sideways to down after a pullback.
  • This week, the EURUSD traded above last week’s high and the 20-week exponential moving average (EMA) but reversed into a bear bar, potentially trapping some bulls.
  • The bears got a reversal from a wedge top (Feb 2, Apr 26, and Jul 18), a trend channel line overshoot and a higher high major trend reversal.
  • The move down is in a tight bear channel consisting of 7 consecutive bear bars. 
  • That increases the odds of at least a small second leg sideways to down after a pullback.
  • If there is a pullback (bounce), the bears want it to be weak (overlapping bars, doji(s), bear bars) and sideways, followed by another leg down from a lower high major trend reversal.
  • The bulls hope that the current leg down is simply a pullback (like March and June) and want at least a small leg to retest the July 18 high. 
  • They see the market as still being in a broad bull channel.
  • They want the bull trend line to act as support and the market to form a higher low.
  • If the market trades lower, they want a reversal up from around May or March low.
  • The problem with the bull’s case is that the move down is very strong. They will need a strong bull reversal bar or at least a micro double bottom before they would think to buy more aggressively.
  • Since this week was a bear bar closing near its low, it is a sell signal bar for next week. 
  • While it is sitting at a potential support (bull trend line), the bulls still need to do more to prove that they are at least temporarily back in control. They have not yet been able to do so.
  • For now, odds slightly favor the market to still be in the sideways to down phase.
  • If the bears continue to create strong consecutive bear bars, it will increase the odds of the reversal being successful.
  • Any pullback would likely be minor and favor at least a small second leg sideways to down.

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