EURAUD Approaches Critical Support- Longs Favored Above 1.5300
- EURAUD at key support confluence- channel breach to mark reversal
- Updated targets & invalidation levels
- Event Risk on Tap This Week
Chart Created Using FXCM Marketscope 2.0
Technical Outlook: EURAUD is testing a critical support confluence at 1.5298-1.5325. This level is defined by the 61.8% retracement of the monthly advance, the 50% retracement of the September decline, basic trendline support extending off the December low and the operative median-line extending off the monthly highs. The immediate short-bias is at risk while above this level with a breach of the embedded descending median-line formation needed to validate a near-term reversal & possible resumption of the broader uptrend.
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Notes:The pair is trading within the confines of a well-defined descending median-line formation with the decline rebounding off key support early in New York trade. Note that intraday RSI has continued to hold 40-support and suggests that the short-side momentum is waning. A breach above 1.5469 / the upper median-line parallel would validate a near-term reversal & shifts our bias back to the topside targeting objectives at 1.5539, 1.5612 & the weekly high at 1.5690-1.5700. More significant resistance is eyed at 1.5782-1.5800.
A break below this support barrier invalidates the recovery play with such a scenario targeting the 76.4% retracement at 1.5148 & the 200DMA at 1.5048. Keep in mind this is a wider range setup with a quarter of the daily average true range (ATR) yielding profit targets of 73-79pips per scalp. Event risk is light heading into the close of the week with the RBA interest rate decision & Eurozone unemployment, retail sales & PMI figures on tap early in the week next week. Added caution is warranted heading into these releases with the prints likely to fuel volatility in EUR & AUD crosses.
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Relevant Data Releases
Other Setups in Play:
- AUDJPY Following 2016 Trade Plan- Time to Reload
- AUDUSD Rally Accelerates into Resistance- 7037 in Play
- GBPJPY Coiling For Next Big Move- Breach of 170.50 to Fuel Recovery
- EURGBP at Key Inflection Point Ahead of BoE- Something's Gotta Give
- NZDUSD Testing Slope Support- Rebound to Offer Short Entries
---Written by Michael Boutros, Currency Strategist with DailyFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.