EURAUD breaks the neckline and goes higher.

On Friday, EUR received a significant help from the most important person in the ECB – Mario Draghi. His speech, although it failed to deliver any game changers, vastly helped Euro to climb higher on almost all crosses around the world. What is even more significant is the fact that on many instruments, the candle from the Friday allowed to create a mid-term buy signal, which is in most cases a result of the price breaking important local resistances. EURAUD was in a correction mode since June. In that time, the price managed to correct exactly 50% of the recent up trend but foremost, the price created an Inverse Head and Shoulder pattern (SHS), which signals that the correction is over. The exact moment pointing on that is the candlestick from Friday, which breaks the neckline (pink) of the iH&S formation. Additional bullish signal here is a flag (black) with its upper line being defended as a support on the 17th of August. Positive sentiment is also strengthen by the fact that today we are making a higher highs and higher lows so far, which usually is a promising sign after the breakout. Last but not least is the green up trendline. Trend followers should agree that being above that line allows us to open only long positions. The closest support now is the 23,6% Fibonacci. As long as we stay above this level, the sentiment is positive and we should see a continuation of the up trend here. The first resistance are the tops from the beginning of the June but I think there is a potential for much more here.


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