After the pair had consolidated in 200-pip range, the bears decided that they have had enough and finally broke out of its double top formation. Since the size of the double top is roughly around 200 pips, the pair could also possibly move 200 pips lower to 135.00, a former resistance level. If you’re bearish on the pair, now is a good time to consider selling!
If you were unable to jump in the strong up move on the Aussie a couple of weeks back, then you’re in luck! As you can see, the pair is starting to retrace some of its gains and has fallen back to the 1.0400-1.4070 region, which is a good opportunity to buy the pair at a cheaper price. With Stochastic about to hit oversold territory, we could see a bounce up again soon, especially if it finds support and stalls around the 38.2% and 61.8% Fibonacci retracement levels.
Does this setup look familiar? Well, it should because EUR/USD moved almost exactly the same way last week (check out Huck’s trade and my post last week if you missed out)! If history repeats itself, then we could see the same thing happen this week. Look for price to fall back to the area between the 38.2% and 61.8% Fibonacci retracement level before it finds support and shoots up!