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Sideways EURUSD Trading Range

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Market Overview: EURUSD Forex

The market is forming a sideways EURUSD trading range on the monthly chart. The middle of the trading range is an area of balance. Traders will BLSH (Buy Low, Sell High) until there is a breakout with sustained follow-through buying/selling from either direction. Poor follow-through and reversals are hallmarks of a trading range.

EURUSD Forex market

The Monthly EURUSD Forex chart

EURUSD Monthly: Middle of TR, Wedge Bull Flag, Triangle, Sideways EURUSD Trading Range
  • The April monthly EURUSD candlestick was a bear bar closing below the 20-month EMA with tails above and below.
  • Last month, we said that after a weak move higher in March, we could see the market do the opposite by trading lower in April. 
  • The bulls want a reversal from a large wedge bull flag (Jan 6, Oct 3, and Apr 16) around the lower third of the large trading range.
  • They hope to get another leg up to retest the December 28 high.
  • They see the move down from December simply as a two-legged pullback.
  • They want the market to reverse back above the 20-month EMA.
  • 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 17-month trading range.
  • They managed to get follow-through selling below the 20-month EMA in April, but the prominent tail below indicates that the bears are not yet as strong as they hoped to be.
  • They need to create a follow-through bear bar in May to increase the odds of a retest of the October low.
  • Since April is a bear bar with a prominent tail below, it is a sell signal bar for May albeit weaker.
  • May so far (as of Friday, 3 May) has reversed higher to test the 20-month EMA, which is the middle of the trading range. It is an area of balance.
  • For now, the odds for the bulls and bears remain quite equal.
  • Traders will see if the bears can create another bear bar in May 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 around the 20-month EMA for a couple of months, the odds of a retest of the December high will increase. This remains true.
  • Traders will BLSH (Buy Low, Sell High) until there is a breakout with sustained follow-through buying/selling from either direction.
  • Poor follow-through and reversals are hallmarks of a trading range.

The Weekly EURUSD chart

EURUSD Weekly: PB or Failed Breakout? Middle of TR
  • This week’s candlestick on the weekly EURUSD Forex chart was a bull bar with a prominent tail above.
  • Last week, we said that the market may still be in the sideways to down bear leg. If the bulls get more follow-through buying, it could swing the odds in favor of a failed breakout of the triangle pattern and the smaller 22-week trading range.
  • The market traded sideways to down earlier in the week but reversed higher from Wednesday onwards, testing the 20-week EMA.
  • The bears got a breakout below the triangle pattern and the smaller 22-week trading range but were not able to get strong follow-through selling.
  • They hope that the last three weeks were simply a pullback and a breakout test.
  • They want to get at least another leg down from a micro wedge bear flag (Apr 18, Apr 26, and May 3), completing the wedge pattern with the first two legs being February 14 and April 16. 
  • At the very least, they want at least a small retest of the April 16 low (even if it forms a higher low).
  • If the EURUSD trades higher, the bears want the market to stall around the 20-week EMA.
  • The bulls see the prior move down (to April 16) simply as a two-legged pullback (which started on Dec 28) and a bear leg within a trading range.
  • They want a reversal from around the lower third of the large trading range from a higher low major trend reversal, a larger wedge bull flag (Mar 15, Oct 3, and Apr 16) and a wedge in the third leg down (Dec 8, Feb 14, and Apr 16).
  • They need to create consecutive bull bars closing near their highs and trading above the 20-week EMA to indicate they are back in control.
  • Since this week’s candlestick is a bull bar closing in its upper half, it is a buy signal bar for next week albeit weaker.
  • The market has reversed back to the middle of the trading range. It is an area of balance.
  • Traders will see if the bulls can get another consecutive bull bar closing above the 20-week EMA.
  • While the last 3 consecutive bull bars are not very strong, the odds are slowly moving in favor of a failed breakout of the triangle pattern and the smaller 22-week trading range.
  • The EURUSD is in a 76-week trading range. (Trading range high: July 2023, Trading range low: Oct 2023). 
  • The lower third area of the large trading range could be a buy zone for trading range traders. So far, we have seen traders buy around this area.
  • Traders will continue to BLSH (Buy Low, Sell High) within a trading range until there is a breakout with follow-through selling/buying.
  • Poor follow-through and reversals are hallmarks of a trading range.

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