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EURUSD Doji

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Market Overview: EURUSD Forex

The monthly chart formed a EURUSD doji in the middle of the trading range and at the 20-month EMA. The bulls want the 20-month EMA to act as support. The bears will need to create follow-through selling below the 20-month EMA to increase the odds of a retest of the October low.

EURUSD Forex market

The Monthly EURUSD Forex chart

EURUSD Monthly: Doji in Middle of Trading Range, EURUSD Doji
  • The February monthly EURUSD candlestick was a doji bar closing slightly below the 20-month EMA.
  • Last month, we said that the odds slightly favor the market to trade lower in the first half of the month.
  • The market traded lower in the first half of the month and then reversed higher. The market reversed again to close slightly below the opening of the month.
  • The bulls got a reversal from a double bottom bull flag (Jan 6 and Oct 3) and a retest of the trading range high.
  • However, they were not able to get sustained follow-through buying and the market reversed back to the middle of the trading range.
  • They see January and February as a pullback and want at least a small second leg sideways to up to retest the December high.
  • They want the 20-month EMA to act as support. So far this is the case.
  • The bears see the prior move up (Dec 28) as a retest of the July high and got a reversal from a lower high major trend reversal.
  • They see the market as being in a 15-month trading range.
  • They managed to get a strong bear bar closing near its low in January but did not get a strong follow-through bear bar in February.
  • They hope that February was simply a pullback and want at least another leg down.
  • They will need to create follow-through selling below the 20-month EMA to increase the odds of a retest of the October low.
  • Since February is a doji bar, it is a neutral signal bar for next month.
  • The market remains in a 15-month trading range and is trading around the middle of the trading range. It is an area of balance.
  • Poor follow-through and reversals are hallmarks of a trading range.
  • For now, the odds for the bulls and bears are quite equal.
  • Traders will BLSH (Buy Low, Sell High) until there is a breakout with sustained follow-through buying/selling from either direction.
  • Traders will see if the bears can create a bear bar in March trading below the 20-month EMA. If they do, it will increase the odds of a retest of the October low.
  • However, if the market continues to hold above the 20-month EMA for a couple of months, the odds of a retest of the December high will increase.

The Weekly EURUSD chart

EURUSD Weekly: Inside Doji at 20-Week EMA
  • This week’s candlestick on the weekly EURUSD Forex chart was an inside doji bar closing slightly above the 20-week EMA. The market traded sideways for the week.
  • Last week, we said that the market may still be in the sideways to up pullback phase. Until the bulls can create a few strong consecutive bull bars, odds slightly favor any pullback (bounce) to be minor and overall favor sideways to down still after the pullback.
  • The bulls want a retest of the December high followed by a breakout above.
  • They see the current pullback (from Dec to Feb) as minor and want the 20-week EMA or the bull trend line to act as support. 
  • They see this week simply as a small pullback and want at least another small leg up to retest the February high.
  • They want a reversal from a double bottom bull flag (Dec 8 and Feb 14). 
  • The problem with the bull’s case is that the prior move down was in a tight bear channel. 
  • They will need to create consecutive bull bars closing near their highs, trading above the 20-week EMA to increase the odds of the bull leg resuming.
  • The bears got a reversal from a wedge bear flag (Nov 3, Nov 29, and Dec 28) and a lower high major trend reversal.
  • They created a tight bear channel closing below the 20-week EMA. They want a retest of the trading range low (Oct 2023 low).
  • If the market trades higher, the bears want the 20-week EMA to act as resistance followed by at least a small sideways to down leg to retest the February 14 low.
  • Since this week is an inside bull doji, it is a neutral signal bar for next week.
  • Traders will see if the bulls can create a follow-through bull bar, or will the market continue to stall around the 20-week EMA.
  • Traders are looking at the strength of the pullback (bounce). If it is weak and lacks sustained follow-through buying and stalls at the 20-week EMA (as it is now), the odds of another leg down will increase.
  • The EURUSD is in a 66-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 there is a breakout with follow-through selling/buying.
  • For now, the market may still be in the sideways to up pullback phase.
  • Until the bulls can create a few strong consecutive bull bars, odds slightly favor the current pullback (bounce) to be minor and overall favor sideways to down after the pullback.
  • However, if the bulls can create a few strong consecutive bull bars closing above the 20-week EMA, it can swing the odds in favor of the bull leg resuming.

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