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EURUSD rising wedge broke, still room to the downside
This is an update from last week: The Euro broke the rising wedge noted on the 4-hr chart, but the price decline so far has been muted with low-volatility trading conditions dominating. There is still room to go, though, before support in the vicinity above 11200 perhaps puts in another floor. It’s a little late to be putting on a swing-trade based on the pattern break, but the short-term trading bias remains tilted in favor of sellers.
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EURUSD Daily Chart (A bit more room to support)
AUDUSD Head-and-shoulders support expected to break soon
This is a pattern we have been tracking for the past couple of weeks, with the head and right shoulder developing at downtrend resistance. Aussie is currently putting in a small bounce off neckline support, which keeps the pattern from officially triggering just yet. But a close below the neckline should have AUDUSD rolling downhill towards testing flash-crash levels from Jan 2. I stress close below the neckline because it is support until it isn’t and it’s not officially a H&S pattern until the neckline is snapped.
AUDUSD Daily Chart (H&S pattern testing neckline)
AUDJPY ascending wedge broke
This is a good example of why one needs to wait for the breakout of a pattern before running with a bias. The ascending nature of the wedge pattern hinted at increased potential for a bullish breakout, but indeed that is not what we got as yesterday AUDJPY broke to the downside. While it is altogether possible in this low-vol environment it is a fake-out, I will run with the downward bias as long as we don’t see a strong push back inside the pattern around 7950 or higher. The first target is the wedge pattern low at 7740, followed by the flash-crash daily close at 7541 and worse.
AUDJPY Daily Chart (Bearish wedge break)
Also, on the ‘short’ list is AUDNZD.
***Updates will be provided on these ideas and others in the trading/technical outlook webinars held on Tuesday and Friday. If you are looking for ideas and feedback on how to improve your overall approach to trading, join me on Thursday each week for the Becoming a Better Trader webinar series.
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX