Going short EURAUD

This chart is a weekly view so you can see the big wave pattern, and to me it looks like it's topping out at wave 2. It's retraced 50% of wave one and smacked into that level and held a few times. It now looks like it's completed and ABC correction in a flat pattern. Closer in, a clear 5 wave sub pattern can be seen to complete the c wave. It also looks to be breaking down out of a short term triangle pattern.

Closer in on a daily view, things also look to be progressing to the downside

Couple this with an Ichimoku daily that points to a cloud breakdown.

So, it's a risk, but I think it's worth a punt at going short as it's displayed quite a few signs that it doesn't want to go higher. I'll update with profit targets and stops as the trade progresses.

Comment:

Wave theory would suggest wave 3 can extend all the way to 0.5740, but lets be honest, the EUR is NEVER going to trade that low against the AUD. The only real way it might happen is if the EUR itself was facing extension, so I will discount that possibility.

Wave theory might have helped us to get in, but it’s a little more tricky now as, if this is wave 1, then we don’t really have a target to aim at as the bottom of wave 1 will pass us by before we know it’s upon us. So I will revert to some more simple fib levels to make a target price. Right now, I am simply looking at the first retracement level at 1.5485 (July 2012 low to Jan 2019 high (when the AUD dumped 2c in a flash crash)). Alternatively, if you wanted to discount that spike and take the more solid tops around 1.6340, then there is nice fib confluence at 1.5225 which corresponds with the top of sub wave 1.

These targets are a fair way away, so I intend to drill down into 4rh and 1 hr charts to do some fresh counting. And will update then

Trade closed: target reached:

Just looking at an hourly, looks like we have bottomed possibly on wave 3 so I am going to take profit on a bounce back through 1.5806. After that, we can probably look for wave 4, and then selling the top of that. This doesn't exactly fit the picture of the large chart, but I think it's a good move that was caught and nobody ever went broke taking a profit. Plenty more opportunities to come

Trade active:

Also, it would be remiss of me to not consider a continuation of this possible wave 3, in which case targets below could be found at 1.5675 and 1.5588. It could still happen, but I am still happy to take some profits if the market starts to bounce from here, then look to fade the rally

Comment:

ALSO TAKE NOTE RBNZ in about 3 hours from now could have a negative short term impact on AUD. Please take care

Trade closed manually:

So I stopped at the suggested level (1.5806) and you can see it had a good bounce back to some areas that could be worth fading. Personally, I am going to leave this pair alone now as I am short AUDCAD and short NZDUSD, so I will throw my efforts into those 2 pairs. Still, this was a nice quick money maker!