Euro Setting Up as Potential Long-Term Buy Candidate against the AUD, CAD and NOK

- EUR vs. AUD, CAD and NOK have pulled back into the buy-zone on longer-term charts

- They may be at good levels to buy the Euro and join the uptrend

- EUR/AUD and CAD have met all conditions of the set-up

Image © kasto, Adobe Stock

Generally-speaking trending prices do not move in straight lines but in jagged waves of buying selling, a principle which creates the characteristic up-and-down saw-tooth look of financial charts.

The reason this is important is because when prices pull-back temporarily it is often the ideal time to buy into the broader uptrend at a better price.  

This is the principle underpinning the 'buy-zone' a concept developed by trading educators Trade with Precision.

The buy-zone is an area between the 10 and 20 moving averages which is the ideal place to buy on a pull-back and join the uptrend.

Yet a pull-back into the zone during a strong uptrend is not enough on its own to provide a quality buy signal. Traders look for confirmation from a bullish reversal pattern in the buy-zone.

Such patterns include Japanese candlestick patterns such as hammers, bullish engulfing patterns and piercing lines, and if they are also present then it strengthens the reliability of the signal.  

Below are the pairs which are currently showing bullish buy-zone signals with a brief discussion accompanying each set-up:

EUR/AUD

Euro-to-Aussie Dollar has been in an uptrend ever since the 2012 lows, and although it is not the strongest uptrend I have witnessed the last leg since early 2017 has been fairly consistent.

Price has now pulled back into the buy-zone on the monthly chart and then formed a strong piercing line reversal candlestick pattern - a bullish sign.

All the elements are there for a buy-set up and a move higher, potentially to the 2015 highs at 1.6585.

EUR/CAD

The Euro-to-Canadian Dollar rate is looking very similar to the EUR/AUD above. It too has been in an uptrend since 2012 and has now pulled-back into the buy-zone on the monthly chart.

It has also formed a piercing line bullish candlestick reversal pattern completing a buy set-up for the pair to run up to the 1.6105 2016 highs.

EUR/NOK

The Euro-to-Norwegian Krone rate has also pulled-back into the buy-zone on the monthly chart, but unlike the two set-ups above it has not yet formed a strong bullish candlestick reversal pattern, although it has completed an a-b-c correction which is often a precursor to a resumption of the uptrend.

The pair has also formed a small red hammer candlestick so far this month, and if it turns green or develops into another bullish pattern it could provide the necessary signal for a green-light.

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