EUR/AUD Gaps Into Resistance- Pullback to Offer Opportunity
- EUR/NZD pullback off key resistance to be viewed as opportunity
- Updated targets & invalidation levels
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Technical Outlook:EURAUD gaped into a key resistance confluence on Sunday at 1.4430- this region is defined by the 100% extension of the February advance & the upper median-line parallel. Although our broader outlook remains weighted to the topside, the immediate advance is at risk near-term while below this threshold.
Interim support rests at the 1.43-handle with our broader bullish invalidation down at 1.4167. A breach higher from here targets subsequent topside objectives into the sliding parallel extending off the March highs / 1.4595.
Notes:A closer look at price action highlights near-term confluence resistance at 1.4430. Look for a reaction here with the immediate long-side vulnerable below this mark. Interim support now the figure backed closely by the ML. Both 1.4218 & 1.4173 represent areas of interest for exhaustion / long-entries. A breach higher eyes subsequent resistance objectives at 1.4485, the sliding parallel (currently 1.4550s) & 1.4595.
From a trading standpoint I would be looking for another stretch higher to give way to a new low into structural support, where we ultimately want to get positioned for the long-side. Bottom line: the 1.44-handle represents the yearly high-day close and a breach / close above this region would put the broader topside bias back in play. A quarter of the daily average true range (ATR) yields profit targets of 28-32 pips per scalp. Added caution is warranted heading into the Australia CPI & the European Central Bank (ECB) interest rate decision later this week with the releases likely to fuel increased volatility in the Aussie & Kiwi crosses.
Relevant Data Releases
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- 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.