Fibonacci View on EURAUD

Today’s post will cover the technical analysis of the EURAUD. Jack mentioned this currency pair during a chat of ours below an article this week (click here for the link to that post).  Please join the discussions as well by posting comments below the articles!  Right now the Euro has been strong across all currencies it will interesting to see if it can continue read the article below to find out.

 

**Reminder: We suggest that you consider all analysis and trade ideas IN COMBINATION with the understanding of our Double Trend Trap Strategy

What is the EURAUD up to?

Without doubt the weekly chart is trending up but the last few weeks the EURAUD has made a sturdy fall (time will tell whether it’s a reversal or retracement). This downside momentum slowly dried up as the weekly chart posted a weekly Doji candle and an inside candle the last 2 weeks. With last week’s weekly high already broken, the turn back up could be back in the picture.

Eur-Aud weekly

What now?

This question is best answered by placing the Fibonacci retracement levels on the daily chart. There are three Fib retracements (green, magenta, orange) in the screenshot below. Each is placed on a different swing high swing low.

  1. The green Fib is placed from bottom to top of the last swing high swing low of the weekly
  2. The magenta Fib is placed on the very first down move
  3. The orange Fib is placed on the most recent swing high swing low

Eur-Aud daily

What do the Fibs show?

The Fibs tell us that price has stopped at a confluence of the -27.2% Fib target (magenta) and 61.8% retracement Fib (orange). Not only did price stop, but it actually bounced up and broke the down trend line (purple).

With this break of the trend line, there is a fair chance that the swing high swing low on the orange Fib has been completed. This momentum has run its course and there is good probability of retracing this leg.

How far can the turn proceed?

Price is about half way between the 23.6% and 38.2% Fibonacci retracement but these are considered to be shallow Fib levels. Not many times will price a very shallow Fib such as the 23.6%, especially if the weekly chart had so much upside momentum relatively recently (see green Fib).

In our live trading room we therefore concluded that a bigger retracement on the EURAUD at least up to the 38.2% or 50% Fibonacci retracement was a decent probability, which seems likely at the moment.

Eur-Aud daily

So there is space to the upside?

Yes, at least there is space towards the daily Fibs. It does not necessarily mean that price must turn for more downside at these Fibs; price could turn at higher Fibs as well such as the 61.8% or 78.6% or even continue to post higher highs and start and uptrend.

What potential trade setups are available?

For the moment, dips and a retracement of the daily candle could have decent expectancy when targeting the 38.2% or 50% Fib. Even a trailing stop loss could do well as upside momentum picks up speed.

Then there is also the potential trade at the orange Fibs. However, because the Fib is large in terms of the pip size, I am waiting for bearish price action signals on the daily charts at any of the Fibs (from 38.2 to 88.6) for a confirmation of such a turn.

A break of the support has a high chance of translating into a break down towards the confluence of all 3 Fibs: a 78.6% retracement (green), a -61.8% target (magenta) and a -27.2% target (orange).

Take a look at the 2 main scenarios mentioned in the screenshot with the circles providing an idea where the best trades could be.

Eur-Aud daily

What part do you find most interesting to trade? Let us know!

Thanks for sharing and Happy Trading, Chris

 

 

The following two tabs change content below.
Chris is the head of the mentoring program and trading room at Winner's Edge Trading. He has a passion for technical analysis and helping Forex traders achieve their goals in trading. Chris has been trading for almost 10 years and is most fond of the Double Trend Trap (as a strategy), moving averages (as an indicator) and Fibonacci (as a tool).

Latest posts by Chris Svorcik (see all)

Follow our social media:
1359774937_facebook 1359774984_linkedin 1359774949_twitter 1359774960_google 1359774973_rss 1360027635_youtube

Winner’s Edge Trading, as seen on:

Winner's Edge Trading in the news

  • Olga

    Hello guys, i checked out CFI markets-i did download a demo account. There are no swaps, no minimum deposit, they are licenced by Cysec, STP/ECN broker and spreads on EUR/USD is 1.7! Any comments?

  • Chris

    Hello Razu, thank you for taking the time to write back! Much appreciated. Happy that it’s useful and that your analysis is in sync with ours. Thanks again and have a great Sunday!

  • Chris

    Hmmm… i like it!

  • razu

    O grate analysis by fibo.Thank you to sharing this analysis.I agree with you to your technical analysis.

  • http://jbmaverick.wordpress.com/ Jack Maverick

    Yep, you nailed it – above 1.4885 again, likely shoots for 1.2620…below 1.2550, it probably falls off a cliff.

  • Chris

    Thank you L. Ruiz for your feedback and analysis on the EURAUD.

  • Chris

    Haha. Always glad to help ;) Im sure the market will give nice opps on Monday too. Support at 1.4885 and 1.4860 ?

  • L. Ruiz

    There could be a signal long at 1.4944

  • http://jbmaverick.wordpress.com/ Jack Maverick

    I was going to sell Eur/Aud up at 1.4935, but I didn’t, and it’s all your fault. After reading your article, I decided to wait for 1.5000 or 1.5200.
    I could’ve been a gazillionaire by now!

  • http://jbmaverick.wordpress.com/ Jack Maverick

    Or if maybe the screen just started flashing a “SELL IT!” sign…that would be helpful.

  • Chris

    Hi Jack, thanks!! Yes I agree with you that long-term chances of downside continuation are higher; just need to wait for the candle stick confirmations indeed. Or a break of a support line (like the blue one). Lets see if this scenario plays out :) Thanks for the feedback!!

  • http://jbmaverick.wordpress.com/ Jack Maverick

    GREAT analysis, Chris! Thanks much.
    Yeah, the tricky part of this is that it could track all the way back up to 1.5200 to 1.5400, and yet still be headed down long term. Hopefully we’ll get some very clear candle formations on the 4-hour or daily charts (pin bar or at least a doji) that will help point the way. I’m still inclined to look to the short side on this pair, but yes, the move down to around 1.4650 may have just been a retracement in a long term move higher.
    Time to trade options??