Scalps Favor Selling Rallies in EURAUD Post Head and Shoulders Break

Talking Points

• EURAUD Breaks below weekly & monthly opening ranges- Bearish

• Broader head and shoulders break shifts medium-term outlook lower

• Event risk on tap from Europe and Australia heading into month end

EURAUD Daily Chart

Forex-Scalps-Favor-Selling-Rallies-in-EURAUD-Post-Head-and-Shoulders-Break-_body_Picture_2.png, Scalps Favor Selling Rallies in EURAUD Post Head and Shoulders Break

Chart Created Using FXCM Marketscope 2.0

Technical Outlook

• EURAUD breaks below March opening range low 1.5150- Bearish

• Key support break at 1.4940/78 puts Head and Shoulders formation in play

• Support objectives at 1.4829, 1.4690-1.4730, 1.4430/50, 1.4253

• Bearish below 1.5030, 1.5150- Bullish Invalidation

• Daily RSI hold at 60 & subsequent 40 break- Bearish

• RSI signature at lowest level since March of 2013

• Event Risk: German CPI & Eurozone Confidence data tomorrow and RBA Interest Rate Decision on Tuesday

EURAUD Scalp Chart

Forex-Scalps-Favor-Selling-Rallies-in-EURAUD-Post-Head-and-Shoulders-Break-_body_Picture_1.png, Scalps Favor Selling Rallies in EURAUD Post Head and Shoulders Break

Notes: The EURAUD has made an impressive move this week with the pair breaking below the March opening range defined by the 38.2% retracement of the November advance at 1.5150. A weekly opening range break below 1.5085 further supported our near-term bias with the immediate focus remaining on the short-side below this level.

Bottom line: The pair has now completed a 1.618% extension off the decline from the monthly high and although this may offer some interim support, we’ll look to sell rallies / breaks of support while below 1.5030 with only a breach above this week’s high challenging our broader outlook. Note that a larger head and shoulders formation on the daily chart is in play here with longer-term objectives eyed around 1.4250.

Stay nimble heading into Eurozone data tomorrow morning with the RBA interest rate decision early next week likely to fuel added volatility in the pair. Keep in mind that the close of the month and quarter is upon us with the April and weekly opening range likely to offer further guidance on our near-term scalp bias. Follow the progress of this trade setup and more throughout the trading week with DailyFX on Demand.

* It’s extremely important to give added consideration regarding the timing of intra-day scalps with the opening ranges on a session & hourly basis offering further clarity on intra-day biases.

Key Threshold Grid

Entry/Exit Targets	Timeframe	Level	Significance
Resistance Target 1	30min	1.4915	Soft Resistance / Pivot
Resistance Target 2	30min	1.4955	Soft Resistance / Pivot
Resistance Target 3	Daily / 30min	1.4978/84	23.6% Retracement / February Low
Bearish Invalidation	Daily / 30min	1.5010/30	61.8% & 100% Extension(s)
Break Target 1	30min	1.5085	Weekly ORL
Break Target 2	Daily / 30min	1.5148/55	61.8% Ext / 38.2% Retrace / 100DMA / March ORL
Break Target 3	Daily / 30min	1.5221	100% Ext / Weekly ORL
Support Target 1	Daily / 30min	1.4829/55	1.618% & 2.618% Ext(s)
Support Target 2	Daily / 30min	1.4798	December Low / Pivot
Support Target 3	30min	1.4774	200DMA
Bullish Invalidation	Daily / 30min	1.4690 – 1.4730	61.8% Retracement / 100% Ext
Break Target 1	Daily / 30min	1.4550	October High
Break Target 2	30min	1.4502	2.618% Extension
Break Target 3	Daily / 30min	1.4430/50	78.6% & 38.2% Retrace(s) / August Low
Break Target 4	Daily / 30min	1.4253	88.6% Retrace / H&S Objective
Average True Range	Daily (20)	136	Profit Targets 31-34pips

*ORH: Opening Range High

*ORL: Opening Range Low

Other Setups in Play:

• GBPUSD Setup Targets Key Support- Scalp Bias Constructive Above 1.6469

• AUDUSD Testing Key Resistance at 9150- Weekly Open in Focus

• Key Reversals on USDOLLAR, Gold Post FOMC- March Range at Risk

• Trading the USDCAD Triangle- Weekly Opening Range in Focus

• NZDUSD Rallies Into Key Resistance on RBNZ- Bearish Below 8580

• Scalping the EURUSD: Breakout or Fakeout?

---Written by Michael Boutros, Currency Strategist with DailyFX

For updates on this scalp and more setups follow him on Twitter @MBForex

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