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Trading the EURAUD Reversal- Scalp Bias Bearish Below 1.5334
Talking Points
EURAUD correction off key technical resistance underway
Near-term bearish bias at risk ahead of major support targets
Weekly/Monthly opening range in focus
Major event risk on tap from Australia & Eurozone this week
EURAUD Daily Chart
Chart Created Using FXCM Marketscope 2.0
Technical Outlook
EURNZD trading heavy after tagging key resistance 1.5778 last month
Daily RSI divergence & support trigger break- bearish
Weekly opening range breaks to the downside- bearish
Interim support in view 1.5118/48
Break targets support objectives 1.5030 & 1.4940/78- bullish invalidation
Resistance at 1.5450/80- Breach puts broader trend back into focus
Event Risk on Tap: Australian Trade Balance & Retail Sales and Eurozone Retail Sales tomorrow& ECB rate Decision Thursday
EURAUD Scalp Chart
Notes: Last month we highlighted a key support zone around the 1.5020 region and the EURAUD now seems poised to re-test this threshold after achieving all three of our primary objectives and completing a 0.618% extension from the advance off the 2013 low at 1.5778. For now, we’re still treating this pullback as a correction and the pair is coming into some interesting support targets which if compromised would suggest that a more significant high was put in place last month.
Although our broader bias remains weighted to the topside, the initial weekly opening range looks to have broken and an outside day reversal today keeps our focus on the short side of EURAUD while below the opening range low at 1.5297-1.5334 with only a breach above the weekly/monthly range high at 1.5482 shifting our focus back to the topside. Note that the AUDUSD has also shown a similar divergence pattern with today’s rally breaking a resistance trigger dating back to the August high- supportive of further losses in EURAUD. Look for data prints out of Australia and the Eurozone ahead of the ECB to spark some added volatility. Follow the progress of this trade setup and more throughout the trading week in DailyFX on Demand.
* It’s extremely important to give added consideration regarding the timing of intra-day scalps with the opening ranges on a session & hourly basis offering further clarity on intra-day biases.
Key Threshold Grid
Entry/Exit Targets | Timeframe | Level | Significance |
Resistance Target 1 | 30min | 1.5200 | Psychological Figure / 78.6% Retracement |
Resistance Target 2 | 30min | 1.5245 | TL Resistance / Pivot |
Bearish Invalidation | Daily / 30min | 1.5297- 1.5334 | Weekly ORL / 61.8% Retrace & Ext |
Break Target 1 | Daily / 30min | 1.5430/48 | 50% Retrace & Ext / Pivot |
Break Target 2 | 30min | 1.5483 | Weekly ORH |
Break Target 3 | 30min | 1.5590 | Dec High / Pivot |
Bullish Invalidation | Daily / 30min | 1.5118/48 | Pitch Fork Support / 38.2% Retrace / 100% Ext |
Break Target 1 | Daily / 30min | 1.5030 | January Low / November High / August High |
Break Target 2 | Daily | 1.4940/78 | 23.6% & 50% Retracements |
Break Target 3 | 30min | 1.4870 | Soft Support / Pivot |
Break Target 4 | Daily | 1.4800/10 | December Low / 100DMA |
Daily (20) | 185 | Profit Targets 43-46pips | |
*ORH: Opening Range High
*ORL: Opening Range Low
Other Setups in Play:
EURNZD Scalps Eye Key Inflection Point- Bias at Risk Sub 1.6720
USDCHF Defends January Range Low- Scalp Bias Bullish Above 90
FOMC Setups - EUR, CAD, Gold Eye Key Dollar Inflection Points
---Written by Michael Boutros, Currency Strategist with DailyFX
For updates on this scalp and more setups follow him on Twitter @MBForex
To contact Michael email mboutros@dailyfx.com or Click Here to be added to his email distribution list
Join Michael for a Live Scalping Webinar Wednesday morning on DailyFX Plus (Exclusive of Live Clients) at 1230 GMT (8:30ET)
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