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Breakout Above 9-Year Resistance

On 28 Feb we identified a major breakout on the EURAUD forex pair and commented the monthly price chart with:

The pair broke out above a nine-year falling resistance (blue line) and has traded within a narrow range for the last three years similar to what happened from 2005 to 2008. With retail traders extremely short the pair and positively oriented indicators we should expect a repetition of the 2008 scenario with a strong rise towards 1.8 price ratio.  Scenario will remain valid as long as the 7-period monthly moving average is rising.

Long Position Opportunity First Identified on the 8-Hour Time Frame

The opportunity to go long was first identified when an other situation of extreme compression of the volatility was observed on March 1st on the 8-hour time frame:

2018-03-01_AUDUSD-Rare-Bull-Signal

Weekly Breakout Signal Above $1.60

Three weeks later the pair finishes the week with a last hours sprint to break above the upper weekly volatility boundary and a recent weekly resistance line (white segment) with a positive and rising RSI (yellow line) and a non-crossover signal on the MACD. Noteworthy is also the very powerful bullish non-crossover between the 7-period (green) and the 20-period (blue) moving averages. By the opening of next week expect the rate to be supported by the 1.60 level and another weekly green candle to take shape:

Retail Traders Still Overwhelming Short on EURAUD

With the run up above 1.6 the retail traders positioning has not budged with an overwhelming 82% of short positions, which supports a contrarian bullish view and rapid unloading of selling positions:

 

Yearly Time Scale Confirms 1.8 Rate Target

On the yearly price chart the pair has reverted to the upside when forming a doji-star candle with a long bottoming tail in 2012, is now bouncing off the rising 7-period average (circled) and breaking out from a 4-year consolidation triangle pattern (black segments). It should be expected for the rate to test the parabolic indicator (green dots) presently sitting at 1.8 above the rate.

 

Scenario

The EURAUD pair is technically extremely bullish and knowing it is frequently making swift moves and large spikes the rate target of 1.8 should be reached already in 2018 with some minor intermediate consolidation phases.

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