What drove EUR/AUD higher was a serious overbought AUD/EUR. The Pair EUR/AUD saw lows at 1.4137 which translates to overbought AUD/EUR at 0.7073. AUD/EUR had to fall therefore EUR/AUD had to rise. While AUD/EUR was overbought to extremes, EUR/AUD was severely oversold. EUR/AUD Friday saw highs at 1.4484 and translates to AUD/EUR at 0.6904.
EUR/AUD closed at 1.4445 while AUD/EUR closed at 0.6915. EUR/AUD close at 1.4445 translates to AUD/EUR 0.6922 so 10 pips are missing. At the open, EUR/AUD comes down 10 pips or AUD/EUR rises by 10 pips. Each side must meet its equilibrium to begin its next journey.
AUD/EUR from 0.6915 has solid bottom at 0.6880 or EUR/AUD top at 1.4534. EUR/AUD bottom is located at 1.4372 or AUD/EUR 0.6957. The bottom of the AUD/EUR channel is 0.6934 or EUR/AUD 1.4421.
AUD/EUR big break points are located at 0.6862 and 0.6826 and factors to EUR/AUD 1.4573 and 1.4649. Big break point for AUD/EUR above is located at 0.6742 or EUR/AUD 1.4832.
EUR/AUD big break points are located at 1.4576 and 1.4650 from current 1.4445. EUR/AUD 1.4576 and 1.4650 translates to AUD/EUR 0.6860 and 0.6825. EUR/AUD from close at 1.4445 is approaching significant breaks above while AUD/EUR faces significant supports below.
Most vital bottom for EUR/AUD overall is located at 1.4073 or AUD/EUR at 0.7105. AUD/EUR becomes severely overbought at 0.7105 and EUR/AUD severely oversold.
AUD/EUR is allowed 35 daily pips while EUR/AUD is allowed currently 73. AUD/EUR 2 times its range equates to 70 pips so EUR/AUD is off by 3 pips. Both pair’s daily allowable pip movements are extraordinarily low. Currency pairs overall are moving closer and closer to each other’s prices.
Total EUR/AUD movements are 70 pips but encompasses 35 for AUD/EUR and 35 for EUR/AUD.
Took 4 days from EUR/AUD 1.4137 to 1.4445 so 70 X 4 days equals 280 but EUR/AUD closed at 1.4445 or 308 pips. Why slight miss is due to EUR/AUD as 35 maybe current allowable but some days its slightly higher or slightly lower. Why 4 days is because starting day prices for currency pairs and daily candles are never accurate and always off. Never do daily prices and daily candles meet properly to render a full accurate trade assessment therefore all candles are off by X amount of pips. And this includes all currency pairs. AUD begins at 1:30 am EST time while EUR begins at 5:00 am EST therefore a 4 hour interval difference exists.
Brian Twomey, Inside the Currency Market, btwomey.com