Euro Nears Trendline - Indications of Equity Breakout
An extremely eventful last 24 hours as ‘risk’ (Euro, stocks, Aussie) fell overnight before soaring throughout the rest of the day. EURUSD 14140 and S&P 1315 were lows for the day and both appear on the verge of breaking higher still. To this point, I feel that it is futile to base trading decisions on news headlines, which seem to change every half hour – is there a debt deal? What? No debt deal? Pay attention to trend, support, and resistance and trade accordingly. The latter method is conducive to a more peaceful and antacid free existence.
EURUSD support is now 14360, 14330, and 14300. Short term bullish objectives are 14460 (trendline), 14520 (daily R1 pivot) and 14577 (monthly high) but there is a real possibility that this move from 14140 extends into the 15000s over the next few weeks. I welcome weakness in order to increase long exposure but am not willing to short.
AUDUSD support should be strong around 10800. It is possible that the pair is entering an accelerated period (known in Elliott wave as a 3rd wave) in which price will exceed its May high and extend into the mid 11000s.
EURAUD resistance is at 13375 - a rally to there may complete a corrective rally from the low. The level intersects with short term channel resistance early next week.
Today’s rally in equities was accompanied by impressive volume and one must consider the possibility that a breakout to new highs is around the corner. On balance volume is testing its trendline now as well (OBV will often break its trendline before price does).
Key Daily Reversals – EURCAD (up)
Largest Daily Range in 10 days – EURCAD, EURUSD
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.