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Scalping The EURAUD Breakout- Longs Favored Above 1.4353

Scalping The EURAUD Breakout- Longs Favored Above 1.4353

2014-09-23 19:44:00
Michael Boutros, Technical Strategist
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Talking Points

EUR/AUD Daily Chart

Scalping The EURAUD Breakout- Longs Favored Above 1.4353

Chart Created Using FXCM Marketscope 2.0

Technical Outlook

  • EURAUD breaches Andrew’s Pitchfork formation off yearly high
  • Breakout targets key resistance 1.4575- 1.4600bearish invalidation
  • Subsequent topside objectives at 1.4816 & 1.5029/56
  • Support at this week’s low 1.4353- bullish invalidation
  • Break targets support objectives at 1.4216, 1.4137/66, 1.4050
  • Daily RSI resistance trigger break- constructive
  • Momentum signature looking for close above 60- first time since January
  • First directional break above 60 since November- bullish
  • Event RiskAhead: RBA Steven’s Remarks at Melbourne Economic Forum on Wednesday and Draghi speech on Thursday

EUR/AUD 30min Chart

Scalping The EURAUD Breakout- Longs Favored Above 1.4353

Notes: The EURAUD looks to be stalling just below key near-term resistance at 1.4575-1.46 with some intra-week RSI divergence suggesting the pair may be vulnerable to a pullback as we get deeper into the week. That’s said, the main focus remains on the broader Andrew’s Pitchfork formation dating back to the highs of the year with the recent breach further validating the September opening range break noted on the 11th.

Bottom line: We’ll be looking to buy pullbacks while above today’s low at the 1.44-handle with only a break below the weekly opening range low at 1.4352 shifting our near-term focus back to the short-side of the trade. Note that there are numerous speeches by central bank officials this week RBA Governor Glenn Stevens & ECB President Mario Draghi on tap later in the week and will likely fuel added volatility in Euro and Aussie crosses. The average true range here is rather healthy with a quarter of the daily ATR suggesting profit targets of roughly 33pips. Follow the progress of this trade setup and more throughout the trading week with DailyFX on Demand.

* It’s extremely important to give added consideration regarding the timing of intra-day scalps with the opening ranges on a session & hourly basis offering further clarity on intra-day biases.

Key Threshold Grid

Entry/Exit Targets

Timeframe

Level

Technical Relevance

Bearish Invalidation

Daily / 30min

1.4575 – 1.4600

38.2% Retrace / July High / May Low

Break Target 1

30min

1.4652/68

April Low / 50% Retracement

Break Target 2

30min

1.4700

Big Figure / Soft Resistance

Break Target 3

30min

1.4750

Soft Resistance / Pivot

Break Target 4

Daily / 30min

1.4816

50% Retracement

Break Target 5

Daily / 30min

1.45873

61.8% Retrace / May Swing High

Support Target 1

30min

1.4507

Monday High / Soft Support

Support Target 2

30min

1.4450/64

38.2% Retrace / August Close High

Support Target 3

30min

1.4401

Tuesday Low / Soft Support

Bullish Invalidation

Daily / 30min

1.4353

Weekly ORL / Monthly R1 Pivot

Break Target 1

30min

1.4300

Friday Low / Soft Pivot

Break Target 2

30min

1.4237

Last Week’s Low

Break Target 3

Daily / 30min

1.4200/16

23.6% & 38.2% Retracement(s) / Monthly Pivot

Average True Range

Daily (20)

129

Profit Targets 30-33pips

*ORH: Opening Range High

*ORL: Opening Range Low

Other Setups in Play:

---Written by Michael Boutros, Currency Strategist with DailyFX

For updates on this scalp and more setups follow him on Twitter @MBForex

To contact Michael email mboutros@dailyfx.com or Click Here to be added to his email distribution list

Join Michael for Live Scalping Webinars next week Tuesday – Thursday on DailyFX Plus (Exclusive of Live Clients) at 12:30 GMT (8:30ET)

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