Potential signal:
- I am selling below 1.60 with a stop of 1.62, and target of 1.56 below.
- The euro continues to see a lot of downward pressure, with the 1.61 level offering a bit of support at this moment.
- The market is likely to continue to see rallies as a potential selling opportunity.
EUR/AUD
The euro has fallen a bit against the Australian dollar early on Tuesday, and with this, it looks very much like a market that is going to continue to see quite a bit of noise due to the fact that we have the ECB interest rate decision coming out on Thursday.
Wednesday doesn’t have anything on the books that is a red-folder type of event, so it’s possible that traders are still trying to look at this through a commodity-inflation situation.
After all, the Australian dollar is helped by various commodities, and that gives us a little bit of a boost for the Aussie, but the overall downtrend continues. This pair has been very bearish for some time now, and it looks like we are likely to continue to see more of the same over the longer-term.
The overall downtrend continues
The longer-term chart sees support between 1.61 and 1.60. Clearing the 1.60 level to the downside opens up a whole new leg lower, potentially. This is a very real possibility at this point.
We are in an area where a sense of balance makes a certain amount of sense, and if you can see some type of reaction after the ECB interest rate decision and the press conference, it could give you an idea that you can start shorting this pair again on signs of exhaustion.
This is a very negative trend. I don’t see a change in it, at least not any time soon, especially with both central banks fairly hawkish at the moment.
So, this is just a plain, clean downtrend to take advantage of.
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Christopher Lewis is a technical analyst and market commentator at DailyForex with more than two decades of trading experience in Forex and other leveraged markets. Based in Columbus, Ohio, he specializes in chart-based analysis of major currency pairs, stock indices, commodities, and energy markets, focusing on clear support and resistance levels, trend structure, and risk management. Christopher produces daily written and video analysis for traders who rely on technical setups to navigate volatile market conditions
As seen on: Pairs Of Aces Podcast,The Trader Guy, FXEmpire
