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EURAUD Confirms Bull Flag, EURCAD Breaks Resistance

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On Tuesday of last week I mentioned the potential bull flag pattern forming on EURAUD, noting that a close above channel resistance was required to confirm the pattern.

Friday’s price action did just that, giving us a daily close approximately 100 pips above the upper boundary. However the pair quickly ran into horizontal resistance at 1.4768, a level that continued to cap advances during yesterday’s session.

The 4 hour chart gives a great look at the bull flag in question.

EURAUD bull flag on the 4 hour chart

This leaves us waiting for a daily close above 1.4750 before considering a long entry. The next key resistance level beyond 1.4768 comes in at 1.4980, which lines up with trend line resistance from January of 2014.

Staying with the common theme lately, be sure to take extra precautions trading the Euro. The uncertainty surrounding Greece is sure to produce increased volatility on a daily basis. As such, a reduced position size isn’t a bad idea.

Summary: Wait for a close above 1.4750 and then watch for a retest as new support. Key resistance comes in at 1.4980.

EURAUD key levels on the daily time frame

Another Euro pair we have been tracking since late May is EURCAD. Although the inverse head and shoulders pattern has taken a few hits recently from the weekly gaps, the pattern (surprisingly) remains intact.

In fact the reversal pattern was confirmed by the rally on June 2nd, however with trend line resistance from 2014 just above we were waiting for a clearer breakout opportunity. Yesterday’s price action appears to have produced such an opportunity.

Although not nearly as severe as last week’s gap, EURCAD experienced yet another gap down this week. This makes yesterday’s break of trend line resistance even more impressive as the pair had to climb more than 100 pips just to get back to last week’s close.

With yesterday’s price action behind us we can begin watching for buying opportunities on a retest of former resistance as new support. But again, be sure to factor in the likelihood of increased volatility in the Euro, which likely calls for trading a smaller position size.

Summary: Watch for a buying opportunity on a retest of former resistance as new support. Key resistance comes in at 1.4070, 1.4212 and 1.4340 with a measured objective of 1.4490.

EURCAD inverse head and shoulders pattern on the daily time frame

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