The EURAUD is in the process of carving out an ascending channel on the 4-hour time frame. It’s the result of the 280 pip rally that began in the final session of March.
Although the pair climbed to a high of 1.4216 yesterday, sellers were out in force above the 1.4180 handle. The selling pressure formed a 4-hour bearish pin bar, hinting at a substantial depth of offers in this area.
To confirm lower prices are likely over the coming sessions, a close below channel support is preferred. Such a close would expose the trend line that extends from the March 20th low at 1.3872.
From a broader perspective, the technical landscape since early March seems to indicate a head and shoulders pattern. While I don’t personally trade these patterns on anything below the daily time frame, the structure could still signal that lower prices are likely.
From here, I’ll wait for channel support to break on a 4-hour closing basis before considering an entry. At the moment that level comes in near 1.4120. A close below it would expose trend line support near 1.4020 and possibly the 1.3890 handle.
Alternatively, a 4-hour close above 1.4180 would make the chart a bit harder to read. It wouldn’t negate the ascending channel, but it would cause me to doubt the potential for an immediate move lower from current levels.
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