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EURUSD Weak Reversal Bar, Wedge Top

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Market Overview: EURUSD Forex

The EURUSD Forex market formed a EURUSD weak reversal bar as the weekly candlestick has a long tail above but a bull body. Bears want a pullback from the wedge top. They will need to create follow-through selling to increase the odds of a pullback. Bulls want the pullback to form a higher low and reverse up from a higher low major trend reversal.

EURUSD Forex market

The Weekly EURUSD chart

EURUSD Weak Reversal Bar, Weak BO and Wedge Top on Weekly Chart
  • This week’s candlestick on the weekly EURUSD Forex chart has a bull body with a long tail above. 
  • Last week, we said that odds continue to slightly favor sideways to up. However, the parabolic wedge increases the odds that we will see at least a small pullback beginning within the next 1 to 3 weeks.
  • This week closed slightly below last week’s high and below the middle of the bar. 
  • Bulls want a failed breakout below the 7-year trading range. The EURUSD has reversed back above the 7-year trading range low.
  • 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. 
  • The move-up is in a tight bull channel. Odds slightly favor at least a small second leg sideways to up after a pullback. 
  • The bulls hope that the market is now Always In Long. They need to break 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 or around the May high. 
  • They 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. This will take them to the year 2000 low. 
  • The bears want a reversal down from a wedge pattern (Nov 15, Dec 5 and Dec 15) and a double top bear flag (May 30), around the major bear trend line.
  • 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. 
  • This week’s candlestick has the appearance of a reversal bar, albeit a weaker one because it has a bull body.  
  • The bears will need to create consecutive bear bars closing near their lows to increase the odds of lower prices.
  • While the move up is strong and odds continue to slightly favor sideways to up, 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.

The Daily EURUSD chart

EURUSD Daily: Wedge Top, BO of outside Bar
  • The EURUSD trades sideways to up from Monday but formed an outside bear bar on Thursday. Friday broke below the outside bear bar and closed near the low.
  • Last week, we said that the odds slightly favor the EURUSD to still be in the sideways to up phase. However, the wedge top and micro double top increase the odds of a deeper pullback which can begin at any moment.
  • The bulls got a failed breakout below the 7-year trading range. 
  • Before October, they were not able to create sustained follow-through buying. However, the current spike and channel up is a change in the market’s character. 
  • They hope that the market has flipped into Always In Long.
  • If there is a pullback, the bulls want a reversal higher from a higher low major trend reversal and a larger second leg sideways to up.
  • The bears see the recent move up as a 50% pullback from the February selloff.
  • They want a reversal lower from a double top bear flag (May 30) and a wedge top (Nov 15, Dec 5, and Dec 15).
  • The bears want a retest of the September low. They got a breakout from the outside bear bar on Friday and need to create follow-through selling next week.
  • The next targets for the bears are the 20-day exponential moving average and 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.
  • Since Friday was a bear bar closing near the low, it is a good sell signal bar for Monday.
  • Odds slightly favor the EURUSD to trade at least a little lower.
  • For now, the wedge pattern increases the odds of a pullback which may begin soon.

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