EURUSD weakness continue while bulls look for reversal signal, notes Al Brooks.
The EURUSD weekly chart is in a weak bear channel. Traders are continuing to look for 100- to 200-pip moves, lasting two to three weeks.
The EURUSD weekly has been in a tight bear channel since last June. Yet, it also is making lower highs and lows, and it is therefore is in a bear trend (see chart).
The trend is so weak that it is almost sideways. Traders see the chart as a breakout mode pattern. It has lasted an unusually long time. Consequently, traders will switch to trend trading once there is a clear breakout up or down.
The past two weeks had bull bodies. This is a weak bear flag. Traders will probably buy below this week’s low.
If next week trades above this week’s high, it would trigger a buy signal. The bulls see last week’s bull inside bar as a buy signal bar for a failed break below a five-month trading range. However, three sideways bars just below the 20-week exponential moving average is a weak buy setup. It is simply a continuation of the yearlong price action.
No sign of a breakout
There is no sign of an imminent breakout up or down. Traders will continue to look for 100- to 200-pip moves, and then another reversal.
Until there are either consecutive big bull trend bars closing on their highs or consecutive big bear trend bars closing on their lows, traders will bet on a continuation of the weak, tight bear channel.
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