EURAUD, Weekly
EURAUD is moving sideways in wide range with support area between weekly lows at 1.3680 and 1.3912 while upper end is limited by the 50 week SMA and 38.2% Fibonacci retracement roughly coinciding. The nearest weekly high at 1.4277 is almost at level with the 38.2% Fib level at 1.4317 while the previous weekly pivotal highs coincide with the 50 week SMA. As 50 week SMA is pointing down this sideways market has some long term downward tendency. The lower weekly highs contribute to this picture but the fact that the weekly lows have been somewhat equal in March and April points to weakness in downside momentum. The latest weekly pivot low (at 1.3912) being so much higher than the previous lows is a positive indication.
EURAUD, Daily
In the daily picture EURAUD is moving higher from the proximity of a support level created by a sideways move in April this year. Yesterday’s candle was a hammer that is a bullish signal (points to higher prices) and now Stochastics is giving a positive signal by crossing above the signal line. Hammer candle also created a higher low which supports the bullish daily picture. There are no major daily resistance levels nearby while the first daily candle high that could cause the price to stall is at 1.4197. Above this are the upper Bollinger Bands and then the weekly highs. Nearest support levels are at 1.3950 and 1.3912.
EURAUD, 240 min
In 4h timeframe the recent price move took EURAUD to upper Bollinger Bands and close to a 4h pivot candle low at 1.4117. Not so far from the level is also a 50% Fibonacci level (at 1.4112 measured from the May 22nd high to the recent low of 1.3950). Over the last two four hour candles price has retraced back to a recent pivot and found buyers between 38.2% and 50% Fibonacci levels (measured from yesterday’s low to today’s high). The reaction we have seen from this level is healthy and supports the positive picture in the daily time frame. The pair is close to its recent 4h range highs as also reflected in Stochastics being at overbought threshold. At the time of writing the reaction from support has been strong and has coincided with the upsurge in EURUSD from the region of support I suggested in my Currency Movers Report. If the EURUSD strength continues EURAUD is likely to move higher as well.
Conclusion
The long term picture (weekly) is range bound which gives opportunities for swing traders at the range edges. Now that the daily picture has indications that buyers could be taking price higher (higher low and a hammer candle with Stochastics pointing higher) we look for price action based buy signals when there are retracements to intraday support levels. The daily highs are natural target levels with first one being at 1.4197 and the next at 1.4277. A break into new highs (above 1.4115) and a daily close above yesterday’s high at 1.4092 would be further confirmations of the bullish tendency seen in the daily chart. A failure to move above these levels accompanied with downward intraday trends would negate the positive picture.
Janne Muta
Chief Market Analyst
HotForex
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