For this week’s first intraday update, I have a channel + Aussie double special on the menu, with channels on EUR/AUD and AUD/JPY in focus.
EUR/AUD has been trading with a downward tilt lately. And if we connect the most recent peaks and the most recent troughs, we get a rather massive descending channel to play with.
One of the more conservative ways to play a descending channel is to look for opportunities to go short when the pair is at or close to the channel’s resistance area. As y’all can see, however, the pair just recently bounced off the channel’s support and is already beginning to hesitate at the mid-channel area.
As such, there’s a good chance that the pair may be moving back down again without testing the channel’s resistance area.
But just in case them bulls ain’t out of the fight yet, then they’ll likely be gunning for the channel’s resistance area, which should be at or just below the area of interest at 1.4940.
Do note, though, that if the pair clears 1.4940 before breaking past 1.5070, then that would mean that bulls are in total control, so y’all may wanna switch to a bullish bias should that scenario play out.
In any case, just make sure to always practice proper risk management, a’ight?
Back on July 25, we tried to play the ascending channel on AUD/JPY’s 1-hour chart that we’ve been playing since July 14. Unfortunately, that channel (which y’all can still see on that there chart) finally got invalidated and the pair began to move somewhat sideways.
That’s not very surprising, though. After all, I warned y’all that to be extra careful since resistance at 89.20 appears to be strong. Also, the pair had been having difficulty moving past the mid-channel area, which implied that bullish momentum may be running out of steam and signaled that there was a higher-than-average chance for a downside channel breakout.
Well, the pair did stage a downside breakout. However, the pair failed to reach the key area of interest at 86.90 in order to confirm the breakout.
In fact, the pair appears to be reluctant to break past 88.00. In addition, if we connect the most recent peaks and troughs, we get a new ascending channel that’s tilting higher at a lower angle, as y’all can see.
And as y’all can also see, the pair is currently at the new channel’s support area, so y’all better start lookin’ for a chance to go long.
If the channel’s support does hold, then just make sure to observe how the pair reacts to 89.20 if or when it does get there.
Also, do note that there’s still a higher-than-average chance that the pair may move lower even lower instead. After all, stochastic recently failed to reach overbought territory, which may be a sign of strong bearish interest.
Anyhow, of the pair does move lower, then them bears will likely be gunning for 86.90 to invalidate the new ascending channel, and then on to 85.80 next.