EURAUD - another 2618 setup

FX:EURAUD   Euro / Australian Dollar
547 7
Just like EURUSD (see the link below) we have a classic 2618 setup on this pair. I did not give as much explanation on the requirements for this kind of setup here as it's already explained in the EURUSD post.

The current 0.618 retracement is stopped by a large support area that has now become resistance. In order to keep the chart easy to read it is not shown here, but if you squeeze the chart together you will see exactly what I mean.

Target 1 : previous lows
Target 2 : 1.272 extension of last move down

There is a potential 3rd target here where the 1.618 extension of the previous move down and the 1.414 extension of a larger move down align nicely (see red projections).
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**** UPDATE ****
The pair is not following the script but formed a bearish Gartley at market now presenting us with another opportunity to short
justatrader Nico.Muselle
Not yet buddy. At least not unless 1.387/1.389 is broken clearly. Any downside moves are likely to trap bears. That was the case with the bear flag earlier which saw a nice little reversal prematurely instead of dropping lower. Inflation #'s due tomorrow and I guess AUD could range until then. A test to 1.4 looks more and more evident.
+2 Reply
Nico.Muselle justatrader
With this pattern I'm looking for a 0.382 and 0.618 fib retracement so a decline into 1.38. Even with your scenario in mind this is not impossible I'd say :)
Nico.Muselle justatrader
*** UPDATE *** 0.382 retracement reached, 80 pips profit taken (75%) of the position size closed, stops rolled to break even and keeping the remaining 25% open for Target 2 (0.618 retracement)
+1 Reply
mariusb Nico.Muselle
Hello Nico, I follow you for some time and I just want to thank you for very good explanations, easy to understand even for a beginner! Keep up the good work!
+1 Reply
Hi Marius, I'm glad it is helpful for you ! You can count on it that I will keep posting some of my ideas, especially if there is a potential educational edge to it. :)
Bullish divergence is in play right now + the DT mentioned is quite a weak test of resistance, barely a kiss and go. Another retest to 1.395/1.4 is on the cards before the lower supports can be broken. So 1.4/1.389 offers a better chance/price to short.

RBA minutes tomorrow and markets could likely react bearishly on AUD... well, bearish until we get to see inflation numbers the day after!!

Another ccy to watch for GBPAUD.
+1 Reply
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