It looks like euro pairs are the ones to watch this week as traders are eagerly awaiting Draghi’s Jackson Hole speech. I’m watching this descending channel breakout and pullback on EUR/AUD but I’m not sure if it’s a fake out. What do you guys think?
Long EUR/AUD Idea
It looks like price already made its way past the channel resistance around the 1.4900 mark, signaling that the downtrend may be over. Price hit a ceiling close to the 1.5000 handle, though, and has fallen back inside the channel for a bit.
Euro bulls don’t seem to be backing down just yet, pushing price slightly past the channel resistance once more. At the same time, commodity currencies are taking a hit due to the return in geopolitical risks lately.
I’m also keeping close tabs on iron ore prices to gauge where the positively-correlated Aussie might go next. The commodity has been trending higher in the past weeks but it also seems ready to top out. In that case, EUR/AUD could sustain its upside break and rally.
But of course the main event is likely to be Draghi’s speech as many are counting on the ECB head honcho to drop some hints on tapering. Although the latest central bank statement clarified that they’re not ready to release more details on their next policy moves just yet, any upbeat remarks from Draghi could be interpreted as hawkish signals.
I haven’t set actual entry orders just yet since I plan on watching how the Jackson Hole events unfold to help me gauge if there will be enough bullish momentum. I’ll be ready to hop in a long position past the 1.5000 major psychological resistance and aim for the highs around 1.5250 as my initial target.
See also: Q2 2017 Trading Performance Review
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