Talking Points
Trendline break looks for validation with breach above Fibonacci resistance
AUDUSD price action signals risk of correction- Constructive for EUR/AUD
Bias bullish above 1.4140 – Long conviction above 1.4340
EURAUD Daily Chart
Chart Created Using FXCM Marketscope 2.0
Technical Outlook
EURAUD breaches trendline resistance off August high- 1.4340 breach to validate
Topside breach eyes resistance targets at 1.4469 and 1.4560/75
Interim support 1.4220/40- 1.4140 Bullish invalidation
Daily RSI long trigger pending at 50 (note trigger break earlier)
Key Events Ahead: Eurozone Manufacturing, Services & Composite PMI Thursday
EURAUD Scalp Chart
Notes: Similar to the EURNZD setup noted in yesterday’s report, but not with quit as much conviction. A bullish weekly opening-range break and subsequent breach above confluence resistance (1.4226-1.4238) warranted long exposure after seven consecutive daily attempts at breaking below the 1.4122/40 support structure failed. The rally encountered Fibonacci resistance at 1.4336/40, a region that has served as a clear pivot dating back to early September. Momentum seems uninspiring in the near-term with pullbacks likely to offer favorable long entries and clearer topside triggers. A breach above the highs puts the larger channel-break back on track with such a scenario eying objectives at 1.4390 and 1.4465.
Slight bullish divergence on the daily chart has been identified and we’ll continue to target topside scalps. Only a break and close below 1.42 invalidates our scalp bias while a move below 1.4140 would negate our broader directional bias; such a scenario targets key longer-term Fibonacci support at 1.4041 and the 38.2% retracement of the 2013 range at 1.3955.
Note that near-term price action suggests that the AUSDUSD may be ready to correct lower as well after pressing into 4-month highs before breaking below the weekly range low. As such we will be cautiously watching price action develop for further evidence that an interim high may be in place.
* It’s extremely important to give added consideration regarding the timing of intra-day scalps with the opening ranges on a session & hourly basis offering further clarity on intra-day biases.
Key Threshold Grid
Entry/Exit Targets
Timeframe
Level
Significance
Bearish Invalidation
Daily / 30min
1.4336/40
50% & 23.6% Retracements
Break Target 1
30min
1.4380/92
10/13 Weekly High / 61.8% Retrace
Break Target 2
30min
1.4430
Soft Resistance / Pivot
Break Target 3
Daily / 30min
1.4465/70
38.2% & 78.6% Retracements
Break Target 4
30min
1.45
Psychological Figure / Pivot
Break Target 5
Daily / 30min
1.4560/75
Late Sept High / 50% Retracement
Support Target 1
30min
1.4290
38.2% Retracement
Support Target 2
30min
1.4225/37
23.6% Retrace / 38.2% Extension
Support Target 3
30min
1.4175
Soft Support / Pivot
Bullish Invalidation
Daily / 30min
1.4122/40
October Low / 50% Fib Extension
Break Target 1
30min
1.4080
Soft Support / Pivot
Break Target 2
Daily / 30min
1.4042
61.8% Fib Ext
Average True Range
Daily
121
Profit Targets 28-30pips
Other Setups in Play:
EURNZD Long Range Scalp Eyes Resistance- Bullish Above 1.6055
USD at Support Ahead of NFPs- GBP, AUD & Gold Scalp Biases in Focus
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—Written by Michael Boutros, Currency Strategist with DailyFX
For updates on this scalp and more setups follow him on Twitter @MBForex
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