EUR/AUD Tests Support at 1.3225
The
EUR/AUD
has been a contestant staple for
trend
traders moving downward for nearly three years from its 2008 high at 2.1114. The pair continues to grind lower, recently creating a monthly low on July 12th at 1.3104. As price temporarily retraces against the trend on our shorter time frames, traders can wait patiently looking for a breakout in the direction of the overall trend.
This week we have seen the
Euro
gaining ground against many of the major currencies around the globe. This change of pace has been brought largely on the fact that EU leaders are finally looking to back a new
bailout plan for Greece
. The
Aussie
has stood out for maintaining its ground this week where other pairs have faltered. Money continues to flow to
high yielding
currencies, and the Aussie dollar has been the direct beneficiary. If this bias continues, we can reasonably expect our trend to continue as well.
Price Action
Moving to a 4H chart, we can see price consolidating at the bottom of our previous leg down in a
triangle
formation. Price is currently making an attack on
support
, currently residing at the 1.3225 level.
Resistance
is firmly overhead at 1.3318, drawn by matching up the highs from July 18th and 22nd. As price moves between these two points, traders can wait patiently anticipating a
breakout
with the trend.
Trading O
pportunity
My preference is to sell the EUR/
AUD
with the trend as price moves through support on a breakout. Entry’s should be placed under the previous low of 1.3163.
Stops
should be placed near the 1.3278 handle.
Limits
should target 1.2933 or better, setting up for a minimum return of 230
pips
for a clear 1:2 Risk/Reward ratios.
Alternative scenarios include price breaking out above resistance at 1.3318.
Walker England contributes to the
Instructor Trading Tips
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