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EURUSD Weak Bear Bar, Need Follow-through

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Market Overview: EURUSD Forex

The EURUSD Forex was a EURUSD weak bear bar on the weekly chart. The bears want this to be the start of a two-legged sideways-to-down pullback. They will need to create follow-through selling next week. The bulls want any pullback to be sideways and not deep. 

EURUSD Forex market

The Weekly EURUSD chart

EURUSD Weak Bear Bar with Long Tail Below and Pullback on Weekly Chart
  • This week’s candlestick on the weekly EURUSD Forex chart was a bear bar with a long tail below.
  • Last week, we said that while odds continue to slightly favor sideways to up, the wedge pattern increases the odds that we will see at least a small pullback beginning within a couple of weeks. 
  • The bulls got a failed breakout below the 7-year trading range. 
  • The move up is in a tight bull channel. That means strong bulls.
  • The bulls hope that the market is now Always In Long. 
  • They have also broken above the major bear trend line with follow-through buying. 
  • The strong move up increases the odds of at least a small second leg sideways to up after a pullback. 
  • The bulls want any pullback to be sideways and not deep.
  • Since the September low, the bulls have created bigger bull bodies with closes near their highs with follow-through buying, while the bear bars are weak with no follow-through selling.
  • Will the bears be able to create follow-through selling now?
  • The bears want a reversal lower from a double top bear flag (May 30 and Jan 2) and a lower high around May/June high. They also have a wedge pattern (Nov 15, Dec 5 and Dec 15).
  • 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 more aggressively. 
  • December 30 and January 2 formed a micro double top.
  • The bears hope that this week is the start of a two-legged sideways to down lasting at least a few weeks.
  • The first targets for the bears are the 20-week exponential moving average and the November 21 low which is the start of the channel.
  • Since this week was a bear bar with a long tail below, it is a weaker sell signal bar.
  • The bears will need to create a strong follow-through bear bar to increase the odds of lower prices.
  • While the move up since October is strong, it has lasted a long time and is climactic.
  • The wedge pattern increases the odds that we will see at least a small pullback beginning within a couple of weeks. It may have begun this week.
  • Odds slightly favor sideways to down movements in the next few weeks to relieve the overbought conditions.
  • Traders will see if the pullback phase is weak or strong. If the pullback is weak and sideways, the odds of another strong leg-up increase.

The Daily EURUSD chart

EURUSD Daily: Start Pullback – Weak So Far, Retest High?
  • The EURUSD traded lower early in the week followed by a sideways trading range around the 20-day exponential moving average.
  • Previously, we said that the wedge pattern increases the odds of a pullback.
  • So far, the EURUSD has moved sideways since the wedge.
  • The bulls got a failed breakout below the 7-year trading range. The spike & channel up is a change in the market’s character. 
  • They hope that the market has flipped into Always In Long.
  • Bulls want a retest of the December 15 high and a breakout above. They want a continuation of the tight bull channel up.
  • They want any pullback to be sideways and not deep. If they get a weak and shallow pullback, the odds of another strong leg-up increase.
  • If there is a deep pullback, the bulls want a reversal from a higher low major trend reversal and a larger second leg sideways to up.
  • The bears see the move up as a deep pullback from the February selloff.
  • They want a reversal lower from a double top bear flag (May 30 and December 15) and a wedge top (Nov 15, Dec 5, and Dec 15). They also have a small double top (December 15 and January 2).
  • The next target for the bears is the November 21 low which is the start of the bull channel.
  • The bears need to create strong consecutive bear bars closing near their lows to increase the odds of lower prices.
  • While this week could be the start of the pullback, the overlapping bars indicate that the bears are not yet strong.
  • Since Friday was an outside bull bar, it is not a strong sell signal bar for Monday. 
  • It increases the odds that the EURUSD may trade at least a little higher early next week.
  • Traders will see if the bears can get at least another small second leg sideways to down, or if next week retest January 2 high and breaks out above.

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