EURAUD Approaching Critical Levels: Trading the Rising Wedge Formation

EUR/AUD is currently trading within a rising wedge pattern (marked by the black lines) or a channel up formation (marked by the upper black and lower purple lines). Both patterns suggest an upward trend as long as the price remains within the boundaries. A popular strategy in this case is to sell when the price bounces off the upper line and buy when it bounces off the lower line.

However, waiting to trade the breakout can also be a useful approach. In this case, a downside breakout seems more probable. From a technical perspective, a daily close below the black and possibly the purple line would be a long-term signal to go short. While a breakout above the upper black line is also possible and would indicate great strength, the chances for that currently seem limited.