EURO AUD WEEKLY ANALYSIS ~ forex trend trading system
FALSE BREAKOUT OR PAUSE BEFORE SHARP DOWNTREND?
False breakouts from consolidation setups are a common occurrence in the Forex market and can take various forms. In the case of the Euro Aud pair, we see that there has been a break of the Support of the Pennant formed just above its uptrend line suggests the start of a sharp downtrend. However, the sideways movement taking place below this area could also be the setup for a rally to go back inside of the Pennant to resume the uptrend.
WEEKLY CHART
In many cases, the Support area is tested by a temporary pullback before the breakout resumes from consolidation. This could be the scenario developing here on its way to several hundred pips of gains for the Australian Dollar. On the other hand, the strength of the uptrend suggests that a continued move in favour of the Euro is very likely and that a rally back above Support is expected. Based on the Daily Chart, this could already be starting.
DAILY CHART
The downtrend line has already been broken and the Resistance of the Pennant setup has been breached. Further moves to the 1,5040 Support area of the Weekly Chart´s Range would confirm the start of an uptrend here and a return inside that consolidation. Nevertheless, until that bull move is more convincing, there is always a possibility that a reversal bearish on this smaller range takes place to resume the large downtrend.
The dynamic of the market continues to keep us on our toes.
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Duane Shepherd
(M.Sc. Economics, B.Sc. Management and Economics)
Currency Analyst/Trader
Contact: shepherdduane@gmail.com
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