The EUR/AUD pair seems to have entered a consolidation phase because the price is currently within the 1.6260 – 1.6330 range. Although considering the current price action, the probability is in favor of a downside move, which might occur within 48 hours.
Disclaimer: The analysis presented in this article is for educational purposes only and should not be considered as financial advice.
This analysis was done on MetaTrader 4.
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Trade Idea Details:
Key support levels: 1.6262, 1.6217
Key resistance levels: 1.6390, 1.6430
On the hourly chart price broke below the uptrend trendline and tested the 1.6220 low on June 17. The correction up followed and price returned back to the previously established resistance zone near 1.6430. What is important is that this time EUR/AUD cleanly rejected the 38.2% Fibonacci retracement level applied to the 10-12 June wave up. At the same time, there was a clear bounce off the uptrend trendline, which this time acted as the resistance.
Therefore, as long as the price remains below the 1.6430 resistance area, another wave down can be expected. The price might move towards the previous low which corresponds to two Fibonacci retracement levels. Frist being the 127.2% Fibs applied to the corrective wave up occurred on June 16. The second being the 88.6% Fibs applied to the 10-12 June wave up.
Sellers might find a 1.6390 level attractive in terms of selling opportunity. The downside target is located at 1.6217 based on two Fibonacci retracement levels. Therefore, in order to meet the 1:2 Risk/Reward ratio, the stop loss could be placed at 1.6454.