Are EURAUD and EURNZD waiting for their turn?
Both EURAUD and EURNZD have been rangebound since 6 weeks. Their daily and monthly charts paint a compelling picture. Hopefully a driver will come along soon – if the final direction is down, there appears to be room for a big move.
Note the potential head and shoulders bearish reversal pattern with both shoulders nestled against a long term resistance. In the monthly chart you can see the significance of this resistance since 2003. Besides head and shoulders, the right shoulder is being drawn out into a complex 1-2-3-4 channel. The reason I am looking out for a big move below is back in the monthly chart. Price takes the path of least resistance. On top is big resistance (since 2003). Below 52-week low?
Everything looks the same for EURAUD minus the head and shoulders chart pattern. The ‘right shoulder’ consolidation is also a bit more drawn out – the 1-2-3-4 pattern has become 1-2-3-4-5-6-7? How many turning points is not important. What is important is this also looks like a consolidation pattern, maybe a channel, maybe a wedge. True direction will only be revealed when price breaks out. With some luck, the pair will break below since the top of this consolidation is again wedged or nestled against a long term resistance.