On Friday I mentioned that NFPs might be just the medicine we need to get the EURUSD out of it’s range. If you missed Friday’s update, you can find it here.
NFPs did their job, and the EURUSD closed well on Friday, looking to move higher now.
I found something very interesting across several EUR pairs that I wanted to share. Comparing markets is a powerful tool in picking great entries and the euros big push on Friday has setup some excellent examples.
Let’s start with a look at the EURUSD.
Daily chart below:
Friday’s NFP candle managed to break and close above resistance at 1.0620. Price even traded higher than the previous breakout. Do we have a long trade? Not yet. We’re looking for a retest from above now – that’s important to avoid being taken in by another false break.
However, the overall “long” direction looks promising, because price has broken through major resistance.
This is where looking at a few other EUR pairs gets very interesting.
Here is the EURCAD, also on the daily timeframe:
Price has also cleared important resistance, in fact, the EURCAD setup long might be even better than the EURUSD, given that price has spent so long in its range, and we have excellent targets to the upside to aim for.
So, EURCAD > EURUSD for a long.
Let’s add another pair into the equation:
Here is EURAUD daily:
Now this is really interesting if you’re a technicals geek like me. All three charts have similarities, but while the EURCAD and EURUSD have managed to break above important resistance, the EURAUD hasn’t.
If this chart was as strong as the other two, price would be trading in the area I have drawn in by the grey dashed lines.
So out of the three, a EURAUD long is the poorest choice. The converse is also true and very valuable.
Let’s assume that the EURUSD collapses (we do have a US rate statement on Wednesday) and never sets us up for our long. Instead, our attention turns to the short side. If the EURAUD was the poorest choice to go long, then it’s the best choice to short!