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#EURAUD featured on the #BlueberryJam for a long position but why do we think the currency pair will reverse?
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, why we’re looking to get into a potential move, and just break down the market in more detail.
This was the trade that we placed on Blueberry Jam. The reason we’re looking to continue to go long on EUR/AUD is because of the strength and weakness chart showing us that the AU Dollar is extremely strong.
Typically, when a currency is extremely strong, we get a reversal. So, what I’m seeing here is the price trending down into this key supporting level. And now, the market formed a false breakout pattern.
What I mean by a false breakout pattern is that the market, here, closed below the previous low. Breakout traders would look at that and look to short the market because they’re seeing the momentum continuing to the downside.
However, the candlestick formed a bullish close the next day. It went back within the level and the previous candlestick range that formed a false breakout pattern.
Typically, when we see these false breakouts, we get a move in the opposite direction of the original breakout. So, that’s why I looked to buy the opportunity here.
The market hasn’t really done a lot today. It’s been a bit all over the place in terms of the market ranging. We see a bit of strength in other currencies, and it’s mixing around.
So, there hasn’t been a definitive move here. But the trade is still valid, and if the market closes where it is this evening, then the trade will still be technically valid.
Four-hour timeframe
If we go down into a four-hour timeframe, we can see that the price is just consolidating here. There’s no real momentum move just yet.
I was looking for the price to come back down on the four-hour timeframe into this previous high here. If it does, then we could have a look for an earlier buying opportunity.
But that’s not the case. The market has just remained range-bound through there. So, what I want to see is if the market pushes to the upside, are we going to get a pullback into an area of support?
You can see that the market has a little bit of a support level here. So, if you don’t like to take the end of day positions, you could be looking at this intraday level here.
If the market were to break out in this particular time frame, I’d look for the market to pull back and then trade to the upside.
The momentum is definitely slowing in the AU Dollar. We can see that if we look at the AUD/USD, we had that nice bearish candle yesterday.
EUR is still technically bullish. We can see here on the daily timeframe, despite prices being at this resistance, the strength from weakness suggests looking for a bit of a reversal to the upside.
It’s interesting to see if the price can sustain and move in a breakout high. If it does, then I think EUR is getting higher.
That would be interesting to keep an eye on, but keep an eye on EUR/AUD too. I like this momentum to the upside. We’re going to look for that reversal to continue at the big level of support.
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