On Friday I pointed out a potential selling opportunity on the EURAUD. The pair was trading at 1.5437 and was in the process of selling off from the 1.5480 resistance area.
However, because it was Friday and I didn’t want to hold a new position over the weekend, the idea was to wait for the week to close before further deliberation.
Sellers didn’t let up in the final hours of Friday’s session, closing the pair at 1.5403. This gave us a sizable bearish rejection candle to start the new week.
You had to be quick to catch this one, though. The EURAUD only retraced about 20 pips of Friday’s candle before the selling picked up where last week left off.
I know a few members caught it on Friday and decided to hold over the weekend. At the moment, they’re looking at a gain of more than 100 pips.
For those who missed this one, there may be another opportunity to enter short at the 1.5340 handle. If you look at the price action between December 2017 and January of this year, you will quickly see how 1.5340 has served as a pivot.
It’s also very near the October 2017 high as well as the 4-hour close from the May 29 session. That’s no coincidence, by the way.
A retest of 1.5340 as new resistance is likely to attract an influx of selling pressure. The next key support comes in just above the 1.5200 handle, leaving us with 130 pips to work with.
Like the GBPAUD that I mentioned last week (which plunged 230 pips yesterday), I don’t believe this decline is over, particularly after yesterday’s close below 1.5340.
The only thing that would reverse my bearish outlook is a daily close (New York 5 pm EST) back above 1.5340. As long as it holds as resistance on a daily closing basis, the EURAUD remains vulnerable.