EUR/USD, AUD/ USD Channel Scalp Setups- Status Pending

These are the current setups we will be considering this week in the EUR/USD and the AUD/USD. Although our longer-term bias on both these pairs is weighted to the downside, we note that further developments out of the region could spark substantial swings as markets absorb every headline crossing the newswires with the risk of a topside move of some magnitude very possible. Accordingly our topside limits on these particular setups are rather tight with a breach above negating our long-term bias.

EUR/USD Scalp Setup

The EUR/USD has continues to trade within the confines of an ascending channel dating back to the November first low at 1.3607. A break below the convergence of trendline support and the 23.6% Fibonacci extension taken from the October 27th and November 4th crests at 1.3715 eyes profit targets at 1.3680, 1.3655, the 38.2% extension at 1.3620 and the bottom limit at 1.3590.

Interim resistance now stands with short term trendline resistance taken from Friday’s high, backed by 1.3820 and 1.3865. A breach here risks further losses for the greenback with such a scenario eying topside targets at the 1.39-figure and 1.3950. An hourly ATR of 43.86 yields profit targets of 33-37pips depending on entry.Should ATR pull back dramatically, adjust profit targets as needed to ensure more feasible profit targets.

Event risk for the pair mounts tomorrow with the release of the German trade balance figures. Although this data is typically a central focus, the current situation in Europe continues to see traders focused on Greek and Italian developments. That said, traders should be mindful of the release and avoid holding scalps through the print.

*Note that the scalp will not be active until a break below 1.3760 or a rebound trendline resistance with RSI conviction. We will remain flexible with our bias with a move passed the topside limit at the 1.3865 eyeing topside targets.

Key Thresholds

Upcoming Events

AUD/USD Scalp Setup

The Australian dollar has also remained within the confines of its own descending channel dating back to Thursday’s high at 1.0440. A break below interim support at 1.0350 with RSI conviction puts our scalp into play with profit targets held at the 23.6% Fibonacci extension taken from the October 27th and November 3rd crests at 1.0315, 1.0280 and 1.0240. A break here risks further losses for the aussie with extended targets seen at 1.0210 and the 50% extension at 1.0170.

Interim resistance holds at 1.0390 backed by trendline resistance and 1.0440. A breach above this level negates our short-term bias with such a scenario eyeing topside targets at the 1.05-figue, 1.0550, and the 1.60-handle. An hourly ATR of 34.94 yields profit targets of 27-31pips depending on entry. Should ATR pull back dramatically, adjust profit targets as needed to ensure more feasible profit targets.

Event risk on the pair should be negligible barring a substantial miss on tonight’s Australian trade balance figures. Again we suggested that traders refrain from holding scalps through the data release.

*Note that short-scalps will not be active until a break below 1.0350 or a rebound off 1.0390 or subsequent resistance levels with RSI conviction. We will remain flexible with our bias with a move passed the 1.05-figure eyeing topside targets.

Key Thresholds

Upcoming Events

---Written by Michael Boutros, Currency Analyst with DailyFX.com

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