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EUR/AUD Strategy: Aiming to Test Below 1.48 Figure

EUR/AUD Strategy: Aiming to Test Below 1.48 Figure

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Talking Points:

  • EUR/AUD Strategy: Short at 1.4931
  • Euro breaks range floor, hints at move below 1.48 vs. Aussie ahead
  • Negative RSI divergence bolsters the case for a downside scenario

The Euro has broken three-week support against the Australian Dollar, hinting that a top may be in place near the 1.52 figure and opening the door for deeper losses. Negative RSI divergence points to ebbing upward momentum and bolsters the case for a downside scenario.

Near-term support is now at 1.4741, the 38.2% Fibonacci retracement, with a break below that on a daily closing basis opening the door for a challenge of the 50% level at 1.4591. Alternatively, a move back above range floor support-turned-resistance at 1.4950 paves the way for a retest of 1.5032.

Risk/reward parameters appear acceptable to enter short and a trade has been activated at 1.4931, initially targeting 1.4741. A stop-loss will be activated on a daily close above 1.5032. Profit on half of the trade will be booked and stop-loss moved to breakeven upon reaching the first objective.

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.