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Price Action Setups: EURAUD Playing on Strengths and Weaknesses

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EURAUD is my favorite setup at the moment. The pair has been trending down since the second shoulder of the head and shoulders pattern back in March. The pair recently broke two support areas as illustrated in the chart below.

This setup is also a play off of current AUD strength and EUR weakness, which I’ll get to in a moment. The contrast in sentiment between the two could produce an explosive move to the downside.

From here I’ll be looking for sell signals around 1.45. Another way to play this would be a break of the 4 hour inside bar that formed earlier today. The mother bar’s low is 1.4439. Therefore a sell stop order somewhere around 1.4433 would be appropriate in my opinion.

Do keep in mind that a sell stop order in this situation can be riskier than waiting for a pullback. For example if the pair breaks down momentarily triggering your order only to pullback to the 1.45 area. Just like any other decision, it all comes down to what you’re comfortable with.

The next key support area doesn’t appear to come into play until 1.415, which is more than 300 pips away from any sell signal at current levels.

euraud daily forex chart

The choppy trading conditions continued today with the EURUSD slipping past key support. I’m now biased to the downside after today’s break with the next key support coming in at 1.3475.

As we all know, support that is broken becomes resistance. Therefore any retracement back into the 1.358 area could make for an interesting setup given the right price action sell signal.

eurusd daily forex chart

The bearish pin bar on NZDUSD from last Friday is technically still in play, however current price action suggests that this level may not hold. We’ll have to see how the next few days play out, but the market is certainly testing this resistance level.

You guys know I don’t trade the news, but do note that the RBNZ rate decision is tomorrow at 5pm EST. Expect a lot of NZD movement before and especially after 5pm.

nzdusd daily forex chart

Just to clarify, I’m still bearish on NZDUSD given the weekly channel below. Any rallies on the daily chart into resistance can provide a place to watch for sell signals to rejoin the downtrend.

nzdusd weekly forex chart

Another key level I’m watching is .939 on AUDUSD. However based on the weekly chart, I’m not overly eager to short this pair. In fact the weekly chart looks fairly bullish coming off last week’s pin bar – which found support across the 10 and 20 moving averages.

I’ll still keep an eye on this level, but any price action signal from here will have to be extremely convincing for me to want to short this pair given current market conditions.

audusd forex daily chart

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