Despite its recent bounce, the EURAUD is still down 270 pips from the May 16 commentary where I pointed out a possible change in trend.
At the time, the pair had broken below a trend line that extends from the 2017 low. Sellers had also breached the 1.5770 horizontal level during the same session.
Since that time the Euro cross has respected each horizontal level with precision. Following the close below 1.5618 which I also illustrated on May 16, the pair sold off after reaching a high of 15619 on the 23rd.
That decline on the 23rd of May also took out the 1.5480 handle. The New York close (5 pm EST) at 1.5467 was the deciding factor there.
You can see from the chart below how this 1.5480 level has served as resistance since late last week. The May 24 session rallied above the level intraday, but buyers failed to close the price above it.
Fast forward to today’s session, and we can see that buyers are once again struggling to gain traction above 1.5480. As I type this the pair is carving a bearish pin bar that could present an opportunity early next week.
However, it all comes down to today’s close at 5 pm EST. A lot can happen between now and then, so this pending signal could turn out to be just another candlestick. We’ll see.
Another consideration is that this potential pin bar is forming on a Friday. As you may well know, volume tends to dry up at the end of the week. That alone can adversely affect the reliability of a Friday signal.
These are all things to keep in mind once the market opens next week. I may look for a short entry on a retest of the 1.5480 level on Monday or Tuesday, but it depends on how things unfold into the 5 pm EST close.
Key support comes in at 1.5340 with a daily close below that exposing the 1.5215 area.