Market Overview: EURUSD Forex
The market formed a monthly EURUSD pullback to the middle of the trading range. The bulls see the current move as a pullback and a retest of the breakout point. They want the bull trend line or the 20-month EMA to act as support followed by a retest of the recent leg high (Sep 25). To increase the odds of testing the trading range low, they need to create sustained follow-through selling trading below the 20-month EMA.
EURUSD Forex market
The Monthly EURUSD Forex chart
- The October monthly EURUSD candlestick was a bear bar with a long tail below closing above the 20-month EMA area.
- Last month, we said that traders would see if the bears can create strong bear bars with follow-through selling or if the monthly candlestick would reverse to close with a long tail or a bull body by the end of the month.
- The bears see the prior move (to Sep 25) as a buy vacuum test of the trading range high.
- They got a reversal from a double top bear flag (Dec 28 and Sept 25) and a larger double top bear flag (July 18 and Sept 25).
- They hope to retest the middle of the trading range (around the 20-month EMA). They got what they wanted.
- The next targets for the bears are the April low and the October low.
- To increase the odds of testing the trading range low, they need to create sustained follow-through selling trading below the 20-month EMA.
- The bulls see the current move as a pullback and a retest of the breakout point.
- They see the market as being in a broad bull channel.
- They want the bull trend line or the 20-month EMA to act as support followed by a retest of the recent leg high (Sep 25).
- So far, the market remains in a 23-month trading range.
- The market trades around the middle of the trading range, an area of balance.
- Traders will see if the bears can create a follow-through bear bar closing below the 20-month EMA.
- Or will the market trade slightly lower but stall and close with a long tail or a bull body instead?
- Poor follow-through and reversals are hallmarks of a trading range.
- Traders will BLSH (Buy Low, Sell High) until a breakout with sustained follow-through buying/selling from either direction.
- That means traders will look to buy around the lower third and sell around the upper third of the trading range.
The Weekly EURUSD chart
- This week’s candlestick on the weekly EURUSD Forex chart was a bull bar closing in its lower half with a long tail above.
- Last week, we said that traders would see if the bears could create another follow-through bear bar or if the market would stall around the August low or the bull trend line area instead.
- So far, the market is temporarily finding support around the August low and bull trend line area.
- The bears got a strong bear leg testing the August low and the bull trend line.
- The move down was in a 5-bar bear microchannel which means strong selling.
- There may be sellers above the first pullback from such a strong bear microchannel.
- The bears want a retest of the trading range low.
- They see the move (this week) as a pullback and want at least a small second leg sideways-to-down to retest the current leg low (now Oct 25).
- They want the 20-week EMA to act as resistance.
- The bulls see the current move as a deep pullback and the market as being in a broad bull channel.
- They want the market to form a higher low, followed by a retest of the September 25 high.
- They want the August 1 low or the bull trend line to act as support.
- They must create strong follow-through buying over the next few weeks to show they are back in control.
- Since this week’s candlestick has a bull body closing below the middle of its range, it is a weak buy signal bar. It can be a sell signal bar.
- Because of the strong 5-bar bear microchannel, there may be sellers above the first pullback.
- For now, traders will see if the bears can create a strong retest and breakout below the August low and the bull trend line.
- Or will the market stall around the August low and the bull trend line area, followed by a move higher in the weeks ahead instead?
- The market trades around the middle of the trading range, an area of balance.
- The EURUSD is in a 103-week trading range. (Trading range high: July 2023, low: October 2023).
- Traders will BLSH (Buy Low, Sell High) within a trading range until a breakout with follow-through selling/buying.
- That means buying in the lower third and selling near the upper third of the large trading range.
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