I’m setting my entry levels, fellas! EUR/AUD has pulled back to that area of interest I’m watching so I’ll go for a long position once bullish momentum returns.
In my earlier blog post, I was waiting patiently for this pair to pull back to support around the 1.4700 handle before going long. Price did retreat in the past few days but it seems to be stuck in consolidation at the moment.
With that, I’m modifying my entry strategy to get in a long position on a bullish breakout from this short-term consolidation, still aiming for the 1.4975 level as my initial profit target and setting my stop below the lowest Fib. Stochastic seems to be turning higher from the oversold region anyway, so euro bulls might be ready to charge soon.
Profit-taking weighed on the euro in the past few days, along with cautious remarks from ECB Governor Draghi. However, it’s worth noting that majority of the medium-tier reports from its top economies this week have printed stronger than expected results. This includes German factory orders and industrial production, as well as French and Italian industrial production data.
As for the Aussie, the pickup in commodity prices after the release of oil inventories reports allowed the currency to limit its losses. Still, iron ore prices chalked up another steep decline this week as regulatory tightening in China dampened demand and trading volumes, which could mean continued downside pressure on the correlated AUD.
Here’s my game plan:
Long EUR/AUD at 1.4775, stop loss at 1.4575, profit target at 1.4975 for a simple 1:1 return-on-risk. I’ll be risking 0.5% of my account on this setup.
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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