Here we have a nice set-up on the EUR/AUD pair on the 1 hour chart. I started by identifying the long term trend on the 4 hour chart and decided to find a set-up on the 1 hour chart. On the 1 hour chart, I laid out the Fibonacci levels onto my chart from the last move in the market to the downside from the swing high to the swing low. After I had laid out the levels I identified a parallel channel chart pattern to the upside direction. Within the channel we can see price bouncing off of both lines with the market overall moving to the upside at this moment in time. We can also see that price had been trying to break higher highs towards the 50% Fibonacci level and had been bouncing between the 38.2% and 50% levels for several days, before eventually reaching the 50% level which is also an area of resistance on Friday 17th May at 10:00pm. At the start of this bounce to the 50% level I have also identified a moving average crossover indicating a move to the upside.
RSI is currently at 65.82 which indicates to me that the buyers are currently in control of the market, the moving average crossover also backs up the prediction of an upside move. However soon I expect a reversal to the downside. In the meantime I expect the buyers to stay in control for a while and for price to break more higher highs and also break through the resistance area to then reach the 61.8% Fibonacci level. Once price reaches the 61.8% level, this is when I expect the market to reverse to the downside.
If I take an entry on this trade, I will set a 2:1 RISK-REWARD RATIO with a TP set to the swing low of the previous move to the downside.
RSI is currently at 65.82 which indicates to me that the buyers are currently in control of the market, the moving average crossover also backs up the prediction of an upside move. However soon I expect a reversal to the downside. In the meantime I expect the buyers to stay in control for a while and for price to break more higher highs and also break through the resistance area to then reach the 61.8% Fibonacci level. Once price reaches the 61.8% level, this is when I expect the market to reverse to the downside.
If I take an entry on this trade, I will set a 2:1 RISK-REWARD RATIO with a TP set to the swing low of the previous move to the downside.