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Weekly EURUSD Breakout

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Market Overview: EURUSD Forex

The market formed a weekly EURUSD breakout above the triangle. The bulls need to create more follow-through bull bars following this week’s breakout to increase the odds of testing the July 18, 2023, high. The bears want a reversal from a large wedge bear flag (Mar 8, Jun 4, and Aug 14) and a smaller wedge (Jun 4, Jul 17, and Aug 14). They want a failed breakout of the triangle pattern.

EURUSD Forex market

The Weekly EURUSD chart

EURUSD Weekly: Breakout above Triangle, TR High, Weekly EURUSD Breakout
  • This week’s candlestick on the weekly EURUSD Forex chart was a bull bar closing near its high.
  • Last week, we said that traders would see if the bulls could create a retest of the August 5 high with follow-through buying. Or will the market continue to stall around the triangle top followed by the beginning of the bear leg phase?
  • The bulls got a second leg sideways to up following the pullback to the August 1 low and a breakout above the triangle.
  • They need to create more follow-through bull bars following this week’s breakout to increase the odds of testing the July 18, 2023, high.
  • The next target for the bulls is the December 28 high.
  • If the market trades lower, they want the 20-week EMA to act as support followed by another leg up completing the wedge pattern (with the first two legs being Jul 17 and Aug 14).
  • The bears see this week simply as the second leg of a two-legged pullback (the first leg being July 17).
  • They want a reversal from a large wedge bear flag (Mar 8, Jun 4, and Aug 14) and a smaller wedge (Jun 4, Jul 17, and Aug 14).
  • They want a failed breakout of the triangle pattern.
  • They must create strong consecutive bear bars trading below the 20-week EMA to show they are back in control.
  • Since this week’s candlestick is a bull bar closing near its high, it is a buy signal bar for next week.
  • Odds slightly favor the market to trade at least a little higher.
  • Traders will see if the bulls can create a follow-through bull bar following this week’s breakout above the triangle.
  • Or will the market trade slightly higher but stall followed by a pullback into the triangle?
  • The market is trading around the upper third of the trading range which can be the sell zone of trading range traders.
  • The EURUSD is in a 91-week trading range. (Trading range high: July 2023, Trading range low: Oct 2023). 
  • Traders will continue to BLSH (Buy Low, Sell High) within a trading range until a breakout with follow-through selling/buying.
  • Poor follow-through and reversals are hallmarks of a trading range.

The Daily EURUSD chart

EURUSD Daily: Breakout above Triangle, TR High, Wedge
  • The EURUSD traded higher in the first half of the week followed by a pullback on Thursday. Friday was a bull bar closing near its high.
  • Last week, we said that the market may form at least a small retest of the August 5 high (perhaps early in the week), even if it only lasts 1 or 2 candlesticks. If the bulls can create a strong breakout above the triangle with follow-through buying instead, it will increase the odds of retesting the trading range high (Dec 28).
  • The bulls got a second leg sideways to up to retest the prior leg high (Aug 5) and a breakout above the triangle.
  • They see the move on Thursday simply as a breakout pullback test of the breakout point.
  • They want at least a small sideways to up leg to retest the August 14 high followed by strong follow-through buying.
  • The next target for the bulls is the December 28 high.
  • If the market trades lower, the bulls want the 20-day EMA to act as support.
  • The bears see a large wedge bear flag (Mar 8, Jun 4, and Aug 14) and an embedded wedge in the current leg up (Jul 17, Aug 5, and Aug 14).
  • They want a reversal from around the upper third of the trading range and a failed breakout above the triangle.
  • They must create consecutive bear bars trading near their lows and trading far below the 20-day EMA to increase the odds of testing the June low.
  • So far, the move up since August 1 has stronger bull bars with follow-through buying than weaker bear bars with no follow-through selling.
  • Odds slightly favor the market to still be in the sideways to up phase.
  • For now, traders will see if the bulls can create a strong retest of the August 14 high followed by a breakout above.
  • Traders will see if the bulls can create a strong retest of the August 14 high with follow-through buying. If they do, it will increase the odds of retesting the trading range high (Dec 28).
  • Or will the market stall around the August 14 high area instead?
  • The market is trading near the upper third of the triangle which can be the sell zone of trading range traders.
  • Traders will continue to BLSH (Buy Low, Sell High) within a trading range until a breakout with follow-through selling/buying.
  • Poor follow-through and reversals are hallmarks of a trading range.

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