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EURAUD Bearish Pin Bar Hints at a Move Lower

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You may remember the EURAUD commentary I posted over the weekend. In that post I noted the break of the six-month trend line that extends off of the 2015 low. I also mentioned the idea of watching for bearish price action on a retest of the 1.5400 handle as new resistance, which correlates with the October 12th low.

Yesterday’s price action gave us a signal that certainly fits that description. The first half of the session was marked by strong buying pressure with the bulls in control; a close above 1.5400 looked like an afterthought.

However the post-FOMC price action painted a completely different picture. Shortly after the FOMC statement at 2pm EST, the bears took over at the wheel, closing the pair back below the 1.5400 handle.

All in all it was an intraday loss of 200 pips from the session high. More importantly, the selling pressure formed a bearish pin bar on the daily chart, suggesting that lower prices may be in store over the coming sessions.

Do note that there is some Euro event risk in the upcoming European session in the form of CPI readings for both Germany and Spain as well as the German unemployment change. We also have the US third-quarter GDP, which is scheduled for later in the day at 8:30am EST.

That said, a pair like EURAUD should remain somewhat shielded from heavy US-based event risk, relatively speaking of course.

Summary: Opportunity to trade yesterday’s bearish pin bar at the 1.5400 resistance level. Key support comes in at 1.50 and 1.4670. Alternatively, a daily close above the 1.5400 handle would negate the bearish bias and expose former trend line support.

EURAUD bearish pin bar at new resistance

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8 comments
Nantha says

Dear Justin,

Thank you for the heads up. The correlation this pair has with AUDUSD is stronger than EURUSD. My bias towards both pairs are bearish. So if I were to take this trade would it be contradictory to my bias on the AUDUSD?

Reply
    Justin Bennett says

    Hi Nantha,

    You’re welcome. Correlations change all the time, so I wouldn’t necessarily break it down to that level of detail.

    Instead, focus on what the raw price action is telling you.

    Just my opinion, of course.

    Reply
Nantha says

Ok, makes sense I guess. Once again, thank you for your assistance. I really love your site and you articles are so informative. I wished I had found your site when I first started trading.

Reply
    Justin Bennett says

    Nantha, you are welcome. Glad to hear the material is helpful.

    Let me know if I can be of any further help along your journey.

    Reply
Fathin Muhammad Mustafa says

It seems it goes bullish 🙁

Reply
Trader Fred (Freddy M-E) says

It’s has formed a descending triangle isn’t it?

Reply
    Justin Bennett says

    Fred, that’s difficult to answer as I’m not sure what time frame your chart is showing.

    Reply
      Trader Fred (Freddy M-E) says

      I’m on a D1 time frame

      Reply
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