EURAUD: Rebound from low of 1.4578 Met Medium Term Resistance Line Today
The medium term daily candle chart below shows the history of the Euro Currency (EUR) versus the Australian Dollar (AUD), known as EURAUD, and trading near 1.4700 (around time of publication).
A low of 1.4578 was reached since the prior week when the EURAUD was last analyzed in the Ideas You Can Trade series, and was followed thereafter by a bounce back towards today's high where the upper resistance line of the medium term bearish channel (point 4 in magenta color on chart) has again thwarted upwards momentum.
If this resistance line holds further, then EURAUD should re-visit around the 1.4600 level, possibly making a lower-low, before the upper resistance line becomes re-tested. If support near 1.4600 and 1.4550 fail, then a steep dive could make EURAUD look for support near the lower line of the bearish channel - as drawn in the chart below.
Alternatively, if the bullish momentum of the last three days continues and pushes the pair above the above-mentioned bearish resistance line that appears to coincide near today's high, then EURAUD could exit into a more bullish pattern, and escape its current downtrend.
Below are examples of how to trade a bearish continuation or a bullish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 1.4759 with a Limit to take profit @ 1.4841 and a stop-loss @ 1.4721 Risk/Reward Summary: Limit risk = +82 pips profit / (-38) Stop-loss risk = Gain to Loss ratio = 2.56
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 1.4559 with a Limit to take profit @ 1.4521 and a stop-loss @ 1.4581 Risk/Reward Summary: Limit risk = +38 pips profit / (-22) Stop-loss risk = Gain to Loss Ratio = 1.72
Medium Term Daily Candle Chart: