And I’m in! Fundamentals are lining up neatly for this EUR/AUD support breakdown setup so I’ve decided to hop in at market with a short position.
EUR/AUD Trade Idea
Yesterday’s ECB statement and presser turned out to be a mixed bag for the euro, but it’s worth noting that Draghi sounded less upbeat than expected.
Instead of patting themselves on the back for spurring stronger inflationary pressures recently, he downplayed these improvements by saying that underlying figures don’t really reflect an uptrend in price levels.
Draghi also reiterated that they haven’t discussed QE tapering yet and that there are risks from Brexit and Trump in the near-term.
Meanwhile, fresh reports from China showed stronger than expected GDP growth for Q4, as the reading came in at 6.8% instead of holding steady at 6.7%.
Industrial production ticked down from 6.2% to 6.0%, lower than the projected dip to 6.1%, but retail sales advanced from 10.8% to 10.9% versus the estimated drop to 10.7%.
Earlier this week, Australia also printed stronger than expected jobs data and a pickup in labor force participation.
With that, EUR/AUD showed more downside momentum in breaking below the short-term 1.4100 floor, setting its sights on the next support at the 1.3800 area.
I was able to hop in at market at 1.4080 and I set my stop just past the range resistance at 1.4625. The weekly chart gives a better view of my longer-term PT levels.
Brexit uncertainties are also expected to drag the shared currency lower in the next few months, especially since U.K. Prime Minister May emphasized that the euro zone could have more to lose if it gives the Brits a tough time during the negotiation process.Here’s what I got:
Shorted EUR/AUD at market (1.4085), stop loss at 1.4625, ultimate profit target at 1.3025.
I’ve risked 0.5% of my account on this setup and I’m going for a 1.96-to-1 R:R with this initial trade structure. Stay tuned for any adjustments!
As always, don’t risk more than 1% of your account on a single trade and make sure you read our risk disclosure if you’re thinking of taking the same setups.
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