The EURAUD hit my target yesterday in the 1.3900 region. I had entered short at 1.4097 following Monday’s commentary which included the false break of 1.4090 coupled with a bearish engulfing day.
I exited at 1.3907 as this was the spot of yesterday’s retest of 4-hour channel support which I also mentioned on Monday. So, in the end, it was a 190 pip gain.
However, for those who missed the initial entry, the ascending channel you see below could offer a second opportunity. Channels that form against the grain such as this tend to break with the current long-term trend which has been bearish for nearly two years.
When and where it will break is anyone’s guess. But that’s irrelevant as far as I’m concerned because my approach will be the same regardless.
A 4-hour close below channel support would expose the multi-year low at 1.3680. This is the 2015 low and is also the region that attracted a flurry of bids last month.
Alternatively, a move higher would likely encounter sellers near the 1.4090 area. And although such a retest could produce a sell signal, I’ve learned that it’s usually best to wait for a clear break of support.
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