Looks like the euro has one less problem to worry about now that a Greek bailout deal is in the works. Do you think it’s a good idea to take this neat forex trend setup on EUR/AUD?
As you can see from the pair’s 4-hour forex chart below, a trifecta of technical signals are lining up for a potential support bounce around the 1.4700 major psychological mark. This is in line with the rising trend line connecting the recent lows, a former resistance area, and the 50% Fibonacci retracement level.
Stochastic is still on its way down but is already approaching the oversold region, which means that sellers might need to take a break soon and let buyers take over. If that happens, EUR/AUD could bounce back to its previous highs around 1.5072 and beyond.
Earlier today, Australia reported an improvement in business confidence for June, as the NAB index climbed from 8 to 10 during the month. Later on, Germany will print its ZEW economic sentiment figure and possibly show a dip from 31.5 to 30.6. The euro zone ZEW economic sentiment index is also due and it is expected to fall from 53.7 to 51.1. With that, the pair could still have room to tumble and possibly test the trend line support.
Top-tier economic releases are lined up from China mid-week and it looks like forex junkies are bracing themselves for weak data. On Thursday, the ECB is scheduled to make its monetary policy statement and reassuring words from Governor Draghi could keep the euro afloat.
My potential entry area is around 1.4650 to 1.4700, with a stop below the 1.4500 major psychological level and an initial profit target around the previous highs.
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