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EUR/AUD Coils Below 1.53 Resistance- Break Imminent?

EUR/AUD Coils Below 1.53 Resistance- Break Imminent?

Talking Points


Chart Created Using FXCM Marketscope 2.0

Technical Outlook: EURAUD broke out of a multi-month, descending median-line formation off the yearly high with the rally now consolidating just below confluence resistance at the 50% retracement of the September decline. A topside breach of this consolidation pattern is favored but the pair would need to best 1.53-to validate the break with such a scenario targeting resistance objectives 1.5522, 1.5601 & 1.5840.

A downside break eyes support at 1.4952 (near-term bullish invalidation) backed by the median-line parallel extending off the yearly low & the 200 day moving average at 1.4866. As we approach the holidays and thus illiquid markets, it’s worth reviewing principles that help protect your capital. We call these principles the "Traits of Successful Traders.”

EURAUD 30min

Notes: The pair is responding to slope resistance off the monthly high and although we could get some pullback here (currently holding short scalps) we’ll be looking to buy pullback’s while above basic trendline support with a breach higher targeting the 1.5296-1.53, 1.5342 & 1.5384. Note that a pending RSI trigger is in play & could see fuel a deeper pullback before continuing higher.

A downside break of the consolidation pattern targets 1.5036/51 backed by the median-line (~1.50) and key support / bullish invalidation at 1.4951/61. This level is defined by the 100% extension of the decline off the highs, the 38.2% retracement of the December range and the 12/10 swing low. Keep in mind that this is a wider range scalp with a quarter of the daily average true range (ATR) yielding profit targets of 50-53 pips per scalp. Added caution is warranted heading US 3Q GDP tomorrow with the release likely to fuel volatility in risk sensitive pairs amid thin liquidity conditions on this shortened holiday week.

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Relevant Data Releases

Other Setups in Play:

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

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.