In today’s technical analysis, let’s take a look at the euro versus the Australian dollar. Since the beginning of the year, this pair has been trading inside a well-defined rectangle pattern marked with green lines, reflecting a clear sideways trend and a prolonged phase of consolidation.
Yesterday, price briefly escaped this range to the upside, a move marked in red. However, this breakout lacked follow-through and quickly stalled, which allows it to be classified as a false breakout. From a technical perspective, false breakouts often act as traps for late buyers and tend to precede a move in the opposite direction, increasing the probability of a bearish continuation.
This price behavior fits well within the ICT Power of Three framework. The sideways range marked with the green rectangle represents the accumulation phase. The short-lived upside breakout marked in red corresponds to the manipulation phase, where liquidity above the range highs is taken. Following this sequence, the market typically transitions into the distribution phase, marked in orange, which favors movement in the opposite direction of the manipulation.
In this context, the technical expectation is for EUR/AUD to move lower, potentially with increased momentum over the next several hours. As long as price remains below the false breakout area and inside or below the former range, the bias stays bearish, with the distribution phase suggesting further downside ahead.