Tired of choppy EURUSD? Try EURAUD and EURCAD
The never ending saga of the Greece crisis is likely to keep the EURUSD trade sideways for the most part, until one of the two economies, namely the Eurozone or the US gives way. For the Eurozone, while a short term solution to the Greece crisis could see some kind of a rally in the Euro, in the longer term, with the issue not being resolved could yet again result in the Euro move sideways against the US Dollar.
On the other hand, the markets continue to speculate on the Federal Reserve’s interest rate hikes. While the Fed, at this point sounds optimistic of a rate hike this year, the markets are more likely to focus on the macroeconomic fundamentals and react accordingly, thus keeping the US Dollar range bound against the Euro as well.
The sideways bias might however break free should one of the two events be a confirmed one. While it is hard to speculate how the Greece crisis will result in, the Fed’s rate hike prospects look more convincing.
Traders who are frustrated with the price action EURUSD in the medium – long term scale will however find some comfort in currency pairs such as EURAUD and EURCAD both of which look to offer some good trends on the horizon.
EURAUD – Bullish wedge break out
The daily charts for EURAUD shows price breaking out from a falling bullish wedge. The uptrend was established after prices broke near 1.4238. This break out gives a measured move towards the resistance of 1.52 – 1.51.
Price action at the moment has formed a double top near 1.467, which puts the target to 1.441. We could also expect a brief retest of the break out level near 1.429 – 1.4238. A successful test of support here could pave the way for a rally towards 1.51, on break of the longer term trend line (dotted) show on the chart.
EURCAD – Inverted Head and Shoulders
For the EURCAD, the price action is more pronounced as the daily charts shows an inverted head and shoulders pattern that was formed. The neckline of the head and shoulders pattern comes in at 1.3575 – 1.3573 region. Most recent price action saw a retest to this neckline and we expect a continuation to the upside. The inverted head and shoulders pattern gives an upside target towards 1.4139, a conservative level.
Further adding weight to the bias is the fact that the inverted head and shoulders pattern was formed near the bottom of the falling price channel and followed by a fake break out to the upside resulting in a retest of the neckline’s support level.