EURAUD with a Nice Technical Setup

That was definitely a very busy week on the markets. We had a combination of rich calendar, geopolitical tension and good technical situation on many instruments. This allowed to create many interesting setups on the charts. One of the best one in terms of the technical analysis is the EURAUD, where in August, we already climbed over 270 pips higher and still counting.

EURAUD respected the Price Action with a great accuracy. What we have here is an up trend, which started in April, when the price broke the down trendline (blue). The rise was sharp and in May, the anticipated correction started. It was shaped like a flag (black lines), so indicated a trend continuation, not a reversal. Before breaking the upper line of the flag, the price consolidated below the resistance, forming a sideways trend in a tight range. We were locked between the black dynamic resistance and the horizontal support on the 23,6% Fibonacci. Usually it is a very bullish sign. After few days, the breakout finally happened and the price climbed significantly higher triggering a long-term buy signal.

Signal was confirmed this night, when the price fell and tested the recent resistance as a closest support. Price action traders know that this happens often and is usually a good sign to go long. Bullish sentiment will be denied once the price will come back below the 23.6% which currently is less likely to happen.

This article is written by Tomasz Wisniewski, a senior analyst at Alpari Research & Analysis