EURAUD finds support at its long-term trendline

EURAUD closed the week higher bouncing off its major emas and long-term rising trendline originating in Dec’05.This higher close came after a lower close the previous week at 1.6580.

Following two unsuccessful attempts at retesting its 2004 high at 1.7833, EURAUD sold off with a correction into the major emas before hitting a bottom in Jun’05 at 1.5534.The cross attempted a recovery but failed and later traded in a nine-month range before it finally broke out in early 2006 and rose as high as 1.7362 in Jun’06.With a failed retest after that high, a sell off ensued breaking below the 100/50 emas and the inner trendline (magenta) to as low as 1.6580 July’06.EURAUD now trades above its 8-month rising trendline established since 2005.

Figure 1: Daily Chart


Figure 2: Weekly Chart


Where does this cross go from here? Looking at the daily chart, one might say that a consolidation phase is shaping up since this cross is sandwiched between its inner (magenta) and outer trendlines and 100/50 and 200 emas.But the situation on the weekly chart suggests that further slide below its long term rising trendline is possible as the momentum indicators are still negative. A break of this level should push the cross towards its April low at 1.6369 coinciding with the former breakout point (Blue horizontal line) and ultimately towards 6-month horizontal support at 1.5963.

On the whole, as long as EURAUD remains below the inner trendline, a retest of its long term rising trendline(red) and a break lower is possible. A risk to this analysis will be a close above the inner trendline(magenta).

Happy Trading


Mohammed Isah
is a private trader and an independent technical analyst. He initially traded stocks and now primarily focuses on forex. He produces Weekly, Mid-Week and Friday forex technical research which is available at

www.tradingmarkets.com/fxtechnicalresearch
.
He also has a Daily, Weekly and Monthly pivot points reports. You can contact Mohammed on his pivot points reports and other enquiries at:

isahmo@gmail.com