EURAUD: Upper line of Bearish Channel Breached for Nearly First Time Since January
The medium term daily candle chart below shows the price history of the Euro Currency (EUR) versus the Australian Dollar (AUD), known as EURAUD, and trading near 1.4573 around time of publication today.
Last time this pair was reviewed in this series, in late June 2014, the upper resistance line of the medium term bearish channel (point 4 in magenta on chart below), was holding and keeping the pair caught in the downtrend that's been holding it since the start of 2014.
Today that resistance line was breached for nearly the second time since earlier this year and now EURAUD is threatening to make a bullish continuation following the breakout of the channel.
If the pair has now exited with a true break-out, and can at least maintain its status above the channel, bullish momentum could be expected, whereas if the bearish channel is re-entered - which would indicate a false-breakout of today's price action - then the bearish trend should continue.
Below are examples of how to trade a bullish continuation or a bearish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 1.4604 with a Limit to take profit @ 1.4649 and a stop-loss @ 1.4572 Risk/Reward Summary: Limit risk = +45 pips profit / (-32) Stop-loss risk = Gain to Loss ratio = 1.40
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 1.4438 with a Limit to take profit @ 1.4387 and a stop-loss @ 1.4468 Risk/Reward Summary: Limit risk = +51 pips profit / (-30) Stop-loss risk = Gain to Loss Ratio = 1.70
Medium Term Daily Candle Chart: