Previous: EUR/AUD Trading Near Range Resistance; Double Bottom? (8/14)
EUR/AUD 4H Chart 2:04PM EDT 8/17/2012
Earlier in the week (8/14), the EUR/AUD was cracking range resistance at 1.1770. The anticipated regression back toward the central pivot of the range meant a near-term target of 1.1690. The market did follow through with this move. The previous update also noted that if the market can hold above this pivot, it is showing bullish bias for another chance to breakout of the range to the upside.
This is exactly what developed in the next few days, and as we wrap up the week in the Friday (8/17) session, the EUR/AUD has completed the double bottom with a break above 1.1775. It found resistance just below the next key resistance pivot at 1.1857, near the 200-4H-SMA. The 2 swings up to break out is in an upward channel. The RSI also broke above 60 and tagged 70, showing nascent bullish momentum.
As we monitor a throwback, we should note that if the downswing respects the range resistance near 1.1775 or even the rising channel support close to 1.1740, the breakout is valid. A break below 1.17 however is probably part of a bearish continuation swing back toward the record low of 1.1605 and maybe even lower.
As noted in the previous update, the breakout target is first the 1.1940 level, which is the coincidence of a range breakout projection and the 23.6% retracement.
A slightly more aggressive target is the declining trendline. If price continues to rally sharply, it will probably meet the trendlien near 1.21, shy of the 1.2150, 32.8% retracement. This 1.2140-1.2150 area should also be considered a possible resistance area as it was a key support pivot from February 2012.
EUR/AUD Daily Chart 2:08PM EDT 8/17/2012
Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist for FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
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