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Trading the EURAUD Reversal- Scalp Bias Bearish Below 1.5334

Trading the EURAUD Reversal- Scalp Bias Bearish Below 1.5334

2014-02-04 17:57:00
Michael Boutros, Strategist
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Talking Points

  • EURAUD correction off key technical resistance underway
  • Near-term bearish bias at risk ahead of major support targets
  • Weekly/Monthly opening range in focus
  • Major event risk on tap from Australia & Eurozone this week

EURAUD Daily Chart

Forex_Trading_the_EURAUD_Reversal-_Scalp_Bias_Bearish_Below_1.5334_body_EURAUD_Daily.png, Trading the EURAUD Reversal- Scalp Bias Bearish Below 1.5334

Chart Created Using FXCM Marketscope 2.0

Technical Outlook

  • EURNZD trading heavy after tagging key resistance 1.5778 last month
  • Daily RSI divergence & support trigger break- bearish
  • Weekly opening range breaks to the downside- bearish
  • Interim support in view 1.5118/48
  • Break targets support objectives 1.5030 & 1.4940/78- bullish invalidation
  • Resistance at 1.5450/80- Breach puts broader trend back into focus
  • Event Risk on Tap: Australian Trade Balance & Retail Sales and Eurozone Retail Sales tomorrow& ECB rate Decision Thursday

EURAUD Scalp Chart

Forex_Trading_the_EURAUD_Reversal-_Scalp_Bias_Bearish_Below_1.5334_body_EURAUD_SCALP.png, Trading the EURAUD Reversal- Scalp Bias Bearish Below 1.5334

Notes: Last month we highlighted a key support zone around the 1.5020 region and the EURAUD now seems poised to re-test this threshold after achieving all three of our primary objectives and completing a 0.618% extension from the advance off the 2013 low at 1.5778. For now, we’re still treating this pullback as a correction and the pair is coming into some interesting support targets which if compromised would suggest that a more significant high was put in place last month.

Although our broader bias remains weighted to the topside, the initial weekly opening range looks to have broken and an outside day reversal today keeps our focus on the short side of EURAUD while below the opening range low at 1.5297-1.5334 with only a breach above the weekly/monthly range high at 1.5482 shifting our focus back to the topside. Note that the AUDUSD has also shown a similar divergence pattern with today’s rally breaking a resistance trigger dating back to the August high- supportive of further losses in EURAUD. Look for data prints out of Australia and the Eurozone ahead of the ECB to spark some added volatility. Follow the progress of this trade setup and more throughout the trading week in DailyFX on Demand.

* It’s extremely important to give added consideration regarding the timing of intra-day scalps with the opening ranges on a session & hourly basis offering further clarity on intra-day biases.

Key Threshold Grid

Entry/Exit Targets

Timeframe

Level

Significance

Resistance Target 1

30min

1.5200

Psychological Figure / 78.6% Retracement

Resistance Target 2

30min

1.5245

TL Resistance / Pivot

Bearish Invalidation

Daily / 30min

1.5297- 1.5334

Weekly ORL / 61.8% Retrace & Ext

Break Target 1

Daily / 30min

1.5430/48

50% Retrace & Ext / Pivot

Break Target 2

30min

1.5483

Weekly ORH

Break Target 3

30min

1.5590

Dec High / Pivot

Bullish Invalidation

Daily / 30min

1.5118/48

Pitch Fork Support / 38.2% Retrace / 100% Ext

Break Target 1

Daily / 30min

1.5030

January Low / November High / August High

Break Target 2

Daily

1.4940/78

23.6% & 50% Retracements

Break Target 3

30min

1.4870

Soft Support / Pivot

Break Target 4

Daily

1.4800/10

December Low / 100DMA

Average True Range

Daily (20)

185

Profit Targets 43-46pips

*ORH: Opening Range High

*ORL: Opening Range Low

Other Setups in Play:

---Written by Michael Boutros, Currency Strategist with DailyFX

For updates on this scalp and more setups follow him on Twitter @MBForex

To contact Michael email mboutros@dailyfx.com or Click Here to be added to his email distribution list

Join Michael for a Live Scalping Webinar Wednesday morning on DailyFX Plus (Exclusive of Live Clients) at 1230 GMT (8:30ET)

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