On Tuesday of last week, I pointed out a key resistance area on EURAUD. At the time, buyers had reclaimed control after bouncing off of support at 1.6050.
The resistance area of interest was between 1.6230 and 1.6250. That’s the location of the ascending channel top that extends from the July high.
It became clear the September 7th breakout was false when the pair closed back inside the channel on the 18th. That wasn’t a surprise though as an upside break of an ascending pattern like this often results in a false move.
Here’s the chart I posted last Tuesday:
I entered short on the 24th at 1.6232. It’s an entry I announced inside the member’s area and one that came 24 hours before last week’s commentary on this website.
There was no bearish price action at 1.6230/50. However, I reduced my position size quite a bit and felt comfortable with the trade idea knowing that a false break to one side of a pattern often results in an extended move in the opposite direction.
Another level I mentioned last week was 1.6050 support. The area attracted buyers on September 4th and again on the 20th, so it was logical to assume it would do so again.
Sure enough, EURAUD caught a bid at 1.6050 before the weekend. The area is also attracting a few buyers so far this week.
This is likely a temporary pause though. Last month’s false break of channel resistance has yet to play out fully in my opinion. As discussed last week, the confluence of support at 1.5860 appears to be the primary target for sellers.
However, keep in mind that it’s going to take a daily close (New York 5 pm EST) below 1.6050 to expose the 1.5860 region. As long as EURAUD remains above 1.6050, we’ll continue to see the area attract a bid.
There is also another much larger and significant pattern developing here as well. I’ve already shared it with members but will likely post an update on this site if things continue to unfold as anticipated.