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EURUSD Minor Pullback

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Market Overview: EURUSD Forex

The weekly chart formed an EURUSD minor PB (pullback) to the 20-week EMA. The bulls want the 20-week EMA to act as support, followed by a reversal from a double bottom bull flag with the first leg being the December 8 low. The bears need to create a few strong consecutive bear bars closing below the 20-week EMA to increase the odds of retesting the trading range low.

EURUSD Forex market

The Weekly EURUSD chart

EURUSD Weekly: Pullback to 20-Week EMA, EURUSD Minor PB
  • This week’s candlestick on the weekly EURUSD Forex chart was a bear bar with a long tail below.
  • Last week, we said that the odds slightly favor the market to trade at least a little lower.
  • This week traded lower but did not reach the 20-week EMA followed by a pullback higher at the end of the week.
  • The bulls want a retest of the July high followed by a continuation higher in the form of a large second leg up (with the first leg being September 2022 to July 2023 rally).
  • They see the current pullback as minor even if it lasts 1-3 weeks.
  • They want the 20-week EMA to act as support, followed by a reversal from a double bottom bull flag with the first leg being the December 8 low.
  • The bears see the rally since October as a retest of the prior leg’s extreme high.
  • They want a reversal from a wedge bear flag (Nov 3, Nov 29, and Dec 28) and a lower high major trend reversal.
  • They need to create a few strong consecutive bear bars closing below the 20-week EMA to increase the odds of retesting the trading range low.
  • The long tail below this week’s candlestick indicates that the bears are not yet as strong as they would like to be.
  • Since this week’s candlestick is a bear bar closing slightly below the middle of its range with a long tail below, it is a sell signal bar for next week albeit weak.
  • For now, odds slightly favor the pullback to be minor even if it lasts a couple more weeks and the market to still be in the bull leg phase.
  • The EURUSD is in a 58-week trading range. Traders will continue to BLSH (Buy Low, Sell High) within a trading range until there is a breakout with follow-through selling/buying.

The Daily EURUSD chart

EURUSD Daily: Double Bottom Bull Flag?
  • The EURUSD traded sideways to down for the week. Friday was an outside bear doji bar.
  • Previously, we said if the market continues to stall around the November 29 high area, the odds of another pullback will begin within a few weeks.
  • So far, the pullback has begun and is finding some support around the 20-day EMA area.
  • Previously, the bulls got a bull leg which retested the upper third of the trading range (Dec 28).
  • They hope to get a breakout above the 58-week trading range followed by a big second leg sideways to up lasting many weeks.
  • They see the pullback this week forming a double bottom bull flag (Dec 8 and Jan 5).
  • They will need to create follow-through buying next week to increase the odds of retesting the December high.
  • The bears got a reversal down from a wedge pattern near the upper third of the trading range (Nov 6, Nov 29, and Dec 28) and a higher high major trend reversal (Nov 29).
  • They see the rally from October simply as a bull leg within a trading range and want a reversal from a large lower high major trend reversal (with the July high).
  • They will need to create consecutive bear bars closing near their lows trading below the 20-day EMA and the bull trend line to increase the odds of a deeper pullback.
  • Friday was a big outside doji bar and is overlapping with the prior 2 candlesticks. It indicates indecision around the 20-day EMA area.
  • Sometimes, the candlestick after an outside bar is an inside bar or has a lot of overlapping range. If that is the case, it would form an ioi (inside-outside-inside) pattern, which is a breakout mode pattern.
  • For now, odds slightly favor the current pullback to be minor even if it lasts another couple of weeks.
  • However, if the bears can create consecutive bear bars closing near their lows and trading below the 20-day EMA, it could swing the odds in favor of the bear leg beginning. 

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