Forex Trade Orders: EUR/AUD Short Setup

Just when I thought I already got left behind on this EUR/AUD downtrend, the pair made a move higher yesterday and climbed close to my entry area. I’m considering scaling in though, and here’s my plan:

EUR/AUD 4-hour Forex Chart

EUR/AUD 4-hour Forex Chart

I mentioned in my initial trade idea that I was planning on setting orders at the 1.4600 handle or the 61.8% Fibonacci retracement level, which was right smack on the falling trend line then. However, price moved sideways for a few days and it appears that the falling resistance lines up with the 50% Fib this time. With that, I’m keeping my original short order at 1.4600 but reducing the position size to half of my 0.5% total risk on this trade and I’m adding another short order at 1.4550 also at 0.25% risk.

I still believe that EUR/AUD could keep selling off, especially since China released a couple of economic reports that reflected improvements. As Forex Gump discussed, the HSBC flash manufacturing PMI surpassed expectations and showed a return to industry expansion while the CB leading index marked consecutive monthly gains. This could lend support to the Australian dollar since Australia’s exports would definitely benefit from the rise in Chinese demand and the pickup in risk appetite would support this higher-yielding commodity currency as well.

As for the euro, the recent ECB rate cuts are still weighing on the shared currency. Aside from that, German and French manufacturing and services PMIs have shown weak results and hinted of a deeper slowdown in the euro zone. Just yesterday, the German Ifo business climate index also fell short of expectations, as it fell from 110.4 to 109.7 instead of just dipping to 110.3.

Anyway, here are my revised trade details:

Short EUR/AUD at 1.4550 and 1.4600, risking a total of 0.5% on this trade. Stop loss at 1.4750 and PT at 1.4150. I’ll be trailing my stop once price tests the previous lows at 1.4400.

Make sure you read our risk disclosure if you’re thinking of trading this one, too! What do you think of my trade idea?


Happy time

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  • John

    Pretty solid in my opinion. It all lines up nicely. I had hoped for a little more retracement before entering. I refrained from opening a trade last night because I expected the pair to have another breather before descending again and now I see a reversal – Argh! I’m thinking of also going with EUR/NZD, since the possible rate hikes WILL drive it down.

    • Happy Pip

      Thanks for the vote of confidence, definitely needed one right now haha. Yeah I do wish it pulled back a little more until 1.4600. That EUR/NZD looks like it’s ready to break below the previous lows, very shallow retracement, but still depends on the market catalysts. Where are you planning to short?

  • Hans Driezen

    This was a not to be missed opportunity. The pair really had to retest the 1.4550 area, which confluences with Sept. 2013 and Oct 2013 highs and the two lows of May 2014. It could have gone a little higher, but anyway, the H1 and H4 showed signs of reversal yesterday, so I gave it a chance myself too at 1.4530. SL set to break-even now. I think I’ll take half of my profit off at around 1.44 and let the rest run, hopefully to 1.42 at least.

    • Happy Pip

      Yep, I’m in this one at the 1.4550 area too. Just too bad I didn’t risk my full position at that point! Thanks for sharing your plan, I’ve been trying to figure out where to take off some profits too while letting the rest run. Good luck to us!

  • Hans Driezen

    For EURNZD I’m still waiting for a retest of the previous lows at 1.5825, but it does not look like it’s going to happen.
    Can’t believe though I missed the bearish signals at around 1.6190, would have been a nice trade :-)!

    • Happy Pip

      Yeah! That was a pretty shallow retracement and I hesitated to jump in around that 1.6190 area as well. Oh well, at least we’ve got EUR/AUD.