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EURAUD: Next Leg Down to Materialize Below 1.5600

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Important: I use New York close charts so that each 24-hour period closes at 5 pm EST.

Click here to get access to the same charts I use.

It’s been nearly two weeks since I last discussed the EURAUD, so I figured it’s time for an update. And although the pair hasn’t gone far since then, there have been a couple noteworthy developments. But first, I want to revisit the breakdown that occurred on August 3rd.

If you’ve been following along these last few weeks, you no doubt remember the range that developed between 1.5720 support and 1.5880 resistance.

The Euro cross bounced between those two levels for five weeks before succumbing to selling pressure earlier this month. Once support at 1.5720 gave way on August 3rd, I mentioned how the area would likely serve as new resistance.

That’s exactly what we saw happen last week. On Tuesday the EURAUD reached a high of 1.5727 before losing more than 70 pips into the close. Wednesday and Thursday exhibited similar behavior with buyers hitting a wall at 1.5720.

Although the daily time frame doesn’t show it, a 4-hour ascending channel developed as a result of this new range between 1.5600 and 1.5720.

EURAUD 4-hour ascending channel

We discussed this formation at length last week inside the member’s area. I also shared my short entry and reasons for doing so.

It may seem unlikely now, but the EURAUD is still carving what appears to be a head and shoulders pattern. I illustrated this pending topping pattern in the July 30th commentary.

As of now, the pair is still several hundred pips above the neckline near 1.5360. Sellers will need to clear this level on a daily closing basis to confirm the head and shoulders pattern.

If they do, it will open up the measured objective near the July 2017 low at 1.4420. That’s a long way from today’s price; over 1,000 pips. But if the pair’s GBPAUD counterpart is any indication, the likely future direction for the EURAUD points lower.

That said, this is a relatively volatile currency pair. If you’re going to enter and hold for a target that’s several hundred pips away, you’d better have a stop loss that allows for some breathing room.

As you can see from the chart below, the pair is catching a bid in the 1.5600/20 area I pointed out nearly two weeks ago. It’s going to take a daily close below that to expose downside targets including 1.5450/60 as well as neckline support near 1.5360.

Alternatively, a daily close back above the new range ceiling at 1.5720 would negate the bearish outlook.

Keep in mind that things tend to slow down in August, particularly the second half as many from the U.S. and Europe take last minute vacations. As such, we may see the EURAUD continue to spend more time consolidating than trending.

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EURAUD range on daily time frame

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10 comments
Dzunisani says

I want to me in the member area what must i do?

Do you offer mentorship and help us with entries like Signals

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    Dzunisani says

    Sorry be*

    Reply
    Justin Bennett says

    You can access at the end of the webinar (link below) or use the contact form on this site and I’ll send you a link.

    https://dailypriceaction.com

    I occasionally mention my entries, but it is NOT a signal service.

    Reply
Wale Williams says

Good job

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Jenerali says

thanks justin

Reply
    Justin Bennett says

    You’re welcome.

    Reply
Collins says

Technical analysis at its best. Thank you Justin.

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Andrew says

What are the parameters of those two moving averages you use on your charts?? Kindly let me know. Thanks

Reply
Emuobo says

10 and 20 EMAs

Reply
Roy says

Nice. Thanks Coach.

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