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EURAUD is approaching a major trendline resistance, but will the price hold or break?

In this video, we discuss the strength and weakness of the currencies in order to identify the most likely outcome.

Hi, and welcome to this Blueberry Markets video update with me, John Kibbler, Head Currency Analyst.

In this video, we’re going to take a look at EUR/AUD as the price could reverse the trend.

We can see that the price has been trending down for quite a while, and recently we had this large impulse to the upside, and it came back into some structure lows before seeing a move down.

Strength meter

Why am I looking at this market for a reversal? Well, if I bring in the strength meter and have a look at what’s going on, we can see that the AU Dollar recently topped out around the plus fours and was starting to move lower, with EUR slowly moving to the upside. We can see that it came down into the minus fives and has started to push higher.

What I’d like to see is a dip in the AU Dollars and for EUR to spark higher. If we get a crossover in those lines, that would be ideal in looking for potential opportunities. This is because the last time this happened was back in the middle of December last year.

Price action

If we look at price action from the middle of December last year, we can see that the price was around the 21st. You can see what happens after: the price was in this downtrend, making lower lows and lower highs. After that time, it shows us that there’s some strength in Aussie and weakness in EUR. Look at what happened to the price after that: e saw a massive move to the downside with an 8-900 pip move.

Strength and weakness

When looking at the strength and weakness of currencies, we want that crossover to add confirmation to the move. But here, the price was already downtrending before we had the strength and weakness tell us that this is a possible potential move.

It’s suggesting the same. We’ve got EUR moving higher and Aussie moving lower.

Could we potentially trade this market? We can see here that there is an excellent trend line resistance coming through. If we put that and connect these highs, we can see that multiple times; it comes back up into this trend line area and rejects it.

This would be the first confluence for us. If the price were to get back to this area, breakthrough, and close above it, that would be the first sign that the price would move to the upside. This could then be classed as a higher low, and we could look for further uptrending opportunities after breaking this trendline resistance.

Alternatively, we want some prices potentially breaking into new highs. The current highs rest around 1.57. If we can break above 1.57 resistance, we can see that this mark out does support here, then resistance, resistance.

If the price could break above, that would be even better to start looking for buying opportunities on EUR/AUD.

Fibonacci tool

If you want to look at early opportunities, we can look at the Fibonacci tool. We can go from the swing low to the swing high. If the market were to close above the 23.6 of this retracement phase, it would be an opportunity for the price to change in cycle and potentially move up as well.

There are multiple opportunities to look for here. I would wait for the trend line to break as our first confluence. The second confluence would be a break above these highs at 1.57. If we get that, look for the change of trend through here.

Thanks for watching this video update, and I’ll speak to you in the next one.

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