EURAUD Bounces Back After False Bearish Breakout, Presents Strong Buy Signal
21 April 2023
This week has ended on a high note with a promising buy signal on the EURAUD currency pair. The technical analysis suggests a strong potential for a successful trade, with the next few days serving as a confirmation.
Since February, EURAUD has been trading within a rising wedge pattern (marked in red), followed by a smaller falling wedge formation in April (marked in black). Interestingly, the larger wedge was signaling a bearish breakout, while the smaller one was signaling a bullish breakout. Yesterday, the price broke below the lower line of the bigger wedge, triggering a sell signal. However, the drop was quickly halted, creating a false breakout (marked in yellow) that served as a strong buy signal.
The bullish momentum increased, and the price subsequently broke above the upper line of the smaller wedge, confirming and strengthening the buy signal. As long as the price remains above the upper black and lower red lines, the optimism for the bullish trend remains high, with a high probability of a successful trade.