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Checking out the range on EUR/AUD ahead of top tier catalysts from both Australia and Europe this week.

EUR/AUD Range Play

EUR/AUD 4-Hour Forex Chart
EUR/AUD 4-Hour Forex Chart

On the four hour chart above of EUR/AUD, we can see a clear support and resistance area (1.6000 – 1.6300) that traders have been playing since October of 2019. With the market nearing the top of the range and the stochastic indicator already signaling potentially overbought conditions, it might be time to start getting short for a potential reversal play.

I like this setup too due to the fact that we have two top tier economic events this week to be potential catalysts for a fast move. First, we’ve got the latest Australian employment update on Thursday during the Asia session, followed by the European Central Bank’s latest monetary policy statement in the afternoon London session. Expectations are for the Australian jobs event to come in below the previous read of a 39.9K job increase, while the ECB is expected to hold interest rates at 0.0%.

My plan is to put the following orders on if the this scenario plays out: the Australian jobs data surprise positive while the ECB gives dovish remarks on the outlook of the European economy. If we see both scenarios, then here’s my initial trading plan:

Short half position EUR/AUD at 1.6280, max stop at 1.6365 with 0.50% max risk, max target at 1.6005

Short half position EUR/AUD at 1.6280, max stop at 1.6365 with 0.50% max risk, max target at 1.6005

I’ll be risking 1.00% of my account if both positions are triggered for a potential 3.9:1 return-on-risk. Again, I’m only entering these orders if we get a positive Aussie jobs/dovish ECB scenario. If that’s not the case, then I will not enter my orders.

That’s it for now. Stay tuned for updates and as always, remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly. Create your own ideas and don’t simply follow what I do.

This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to make sure you understand the risks involved.