By: Colin Jessup
Two weeks ago we saw a 450 point bearish long shadow aka an inverted hammer on the EUR/AUD closing just above the support zone at 1.3800. The pair has remained bearish however only closing above its daily opening price 5 times since August 08, 2011. Now we have had a bearish wick fill with yesterdays bearish candle closing on another support zone at 1.3600.
This pair has basically been bearish since March of 2009 with some runs by the bulls and while it has found some major support twice at the 1.3000 level and turned bullish briefly after hitting this level, it has remained bearish overall. I expect we will see a bullish retracement at this level, possibly pulling back to 1.3700, which will now be strong resistance. If price breaks through 1.3600 we will see support at 1.3500 and the 1.3375 below that.
Should price turn bullish there will be resistance at 1.3650, 1.3750 and 1.3800 if 1.3800 breaks to the upside we coupld possibly see the establishment of a bullish trend to test the previous highs of 1.4258 & 1.4340.
Happy Trading!