EURAUD: 1.4355 Nearing with ongoing Bearish Momentum Building
The medium term daily candle chart below shows the price history of the Euro Currency (EUR) versus the Australian Dollar (AUD). This currency pair is known as EURAUD, and trading near 1.4412 around time of publication today.
Earlier this month when the EURAUD was last reviewed in the Ideas You Can Trade series, the bearish downtrend reversed briefly when the upper resistance line of the medium term bearish channel (point 4 in magenta color on chart below) saw a breakout to the upside.
Since then the downtrend has resumed, and now the bearish channel may act as bearish support where a strong enough bounce from that line could push the pair higher , whereas if the channel is re-entered the momentum could become more bearish if the channel is re-entered. The next stop for support is 1.4355, where resistance remains just under 1.4600.
Below are examples of how to trade a bearish continuation or a bullish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 1.4541 with a Limit to take profit @ 1.4589 and a stop-loss @ 1.4511 Risk/Reward Summary: Limit risk = +48 pips profit / (-30) Stop-loss risk = Gain to Loss ratio = 1.60
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 1.4455 with a Limit to take profit @ 1.4317 and a stop-loss @ 1.4385 Risk/Reward Summary: Limit risk = +38 pips profit / (-30) Stop-loss risk = Gain to Loss Ratio = 1.26
Medium Term Daily Candle Chart: