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And I’m in! Price pulled back to that support level I’ve had my eye on, so I hopped in at market when the floor seemed to be holding.

Long EUR/AUD Trade

Last week, trade war jitters had been weighing on the higher-yielding Aussie but a brief respite in risk aversion ensued when the possibility of trade talks was floated.

This allowed EUR/AUD to pull back to the Fib levels I had been looking out for and when I saw a bounce off the 1.5900 mark, I decided to jump in a long position at market. That bullish divergence as price made lower lows and stochastic made higher lows was also convincing!

EUR/AUD 4-hour Forex Chart
EUR/AUD 4-hour Forex Chart

My fundamental biases on the euro and the Aussie haven’t changed as hawkish ECB commentary earlier this week would likely keep the shared currency afloat. On the flip side, returning risk-off flows – this time stemming from threats of U.S. military action in Syria – could keep a lid on AUD gains.

I can’t help but worry, though, if I should have waited for a much larger correction on the longer-term time frames. You see, there’s also an ascending channel on the daily chart and the smaller channel’s support lines up with its mid-channel area of interest.

EUR/AUD Daily Forex Chart
EUR/AUD Daily Forex Chart

I do have a decent-sized stop on this position just below the 1.5800 major psychological mark, which should give the trade enough breathing room in case another round of risk appetite comes in play.

As for my profit target, I’m setting my sights past the latest highs onto the top of the smaller channel near 1.6300 for a 1.5-to-1 R:R but I’ll be ready to make adjustments once price tests the highs around 1.6200.

What do you guys think of this play?

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