This currency pair has historically shown beautiful wave symmetry and I think we are in a 5 wave up and at the start of wave 3.
I missed the upward trailing bar, but as luck would have it, had I entered I would have autoclosed. So now I'm waiting for a 1 bar trailing to cover a higher high and have stochastics cross not too close to the overbought 80 zone in order to take a long position. I also have to weigh up risk.
I may have to go down to 1hr to time this well. I do not trade intraday, so timing is trickier than a day trader.
There is a risk of a protracted sideways movement, particularly with all this trade war talk putting downward pressure on the Aussie.
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This is why I'm not an intra day trader & couldn't catch the "wave".
At the time I looked at the hourly chart yesterday, the last red back down in the hourly wave 5 had not reached the fib level PLUS the stochastics had not yet moved into oversold. I was out for the rest of the night & didn't see the turnaround... in fact I was expecting further downward movement as the hourly Wave 5 didn't look fully formed and I thought stochastics were going to fall further.
Daily stochastics aren't giving me a strong enough signal to go long on the daily chart - although the trailing bar is now bullish covering and the hourly chart is retracing on the huge bullish reaction to the Aussie unemployment data.
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Like AUD/USD, I think the AUD/EUR is now stuck in a channel.
I just did a Short sell 0.6324 stop loss 0.634 (where stoch on 1 hr crossed) and limit to 0.6309 as I only want to scalp a small profit and do not want long exposure to this view. I just want to trade the channel. 1 hr & 3 hr stochastic momentum is falling... just ride the wave down to 61.8 retracement on the 1 hr chart.
I'm still bullish medium term, but while I'm waiting for the wave down to complete, why not go short & take adv of the ride?
Important Aussie & Euro announcements this week will dictate where AUD/EUR pair head next from this channel.
Trade closed manually
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Closed the trade a little early to take profits. However it did continue through 0.6309 and has sunk further down since.
Still waiting for momentum to turn bullish....
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I took a step back and drew some trendlines. The chart pattern looks like a broadening channel developing.
The economic calendar this week will provide some shocks - the Aussie CPI numbers, German consumer confidence and ECB rates. These can throw a pebble into the pond and disturb the AUD/EUR wave pattern... but I think these waves are still part of an underlying current upwards.
1AUD based on PPP should naturally be around 70 Euro cents, so it's undervalued at the present exchange rates. I think if not this week, then by week 2 we should be out of this channel and moving back up past the historically oversold valuation.