Why you should look at EUR/AUD

There’s a high potential set-up on the EUR/USD charts today, which can be
seen below.

The narrowness of the Bollinger Bands on the daily chart, and the fact that
they’ve begun widening out, is very exciting. It tells us that EUR/AUD is likely
to make a significant move in the days to come. The question becomes, then,
which way.

The trend of the last month and a half has clearly been to the downside.
What’s more, today’s action (in the last bar) saw the market rally up toward the
top end of the range put in last month fail and reverse. If that rejection is
sustained through the day, it would be a pretty solid negative indication.

The real move we’re looking for to confirm our suspicion would be a close
below 1.6430. That would take out the little support put in last week on the dip

The initial target for a break lower would be the 1.6200 level. That is the
range put in back in February – the 1.60-1.62 price band. That should provide
decent support.

The plan for trading this set-up would be to sell EUR/AUD on a daily close
below 1.6430. The initial stop would be a close back above 1.6545, though
depending on the intervening action we could find something lower from the
intraday (hourly) chart. At least partial profits should be taken as the market
approaches 1.6200, especially if there are any indications of waning momentum.

John Forman is the author of Amazon Top Seller
The Essentials of Trading
and a near 20-year veteran of trading and investing across a wide array of
markets and instruments.  His analysis and market comments have been found in
the financial news media across the world and he has published dozens of
magazine articles on trading methodology and analytic techniques. To learn more
about John’s research and trading activities, visit the
Anduril Analytics website.