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EURAUD Scalp Setup Favors Selling Rallies Sub-1.5030

EURAUD Scalp Setup Favors Selling Rallies Sub-1.5030

2014-05-06 21:00:00
Michael Boutros, Strategist
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Talking Points

  • EURAUD fails at key inflection point / resistance
  • Weekly opening range breaks- Interim scalp bias bearish
  • Limited event risk out of Australia

EURAUD Daily Chart

EURAUD Scalp Setup Favors Selling Rallies Sub-1.5030

Chart Created Using FXCM Marketscope 2.0

Technical Outlook

  • EURAUD Fails to breach above 1.4978-1.5030 key resistance zone
  • Broader head and shoulders play back in focus
  • Scalp bias weighted to the short side sub 1.5030- bearish invalidation
  • Breach target 1.5150, 1.5198
  • Interim support at 200DMA 1.4861
  • Subsequent support objective at 1.4690 – 1.4730
  • Daily RSI support trigger break sub 50- bearish
  • Event Risk Ahead: Australian Retail Sales tonight and Employment Data on Thursday night

EURAUD Scalp Chart

EURAUD Scalp Setup Favors Selling Rallies Sub-1.5030

Notes: We’ve been following the progress of this trade since March 27th when the pair broke below the neckline of a head and shoulders formation dating back to the December highs. The pair achieved two of our primary support targets last month before rallying into key resistance into the close of April trade. The broader focus remains on that formation after the pair failed to break above the 1.5030 bearish invalidation level early this month.

The EURAUD looks to have broken below the initial weekly opening range with the move taking the pair below trendline support dating back to the March 22nd low. Note that the May monthly opening range high now rests within the 1.4980-1.5030 key resistance region and our outlook will remain weighted to the downside while below this mark. Bottom line: looking to sell rallies / breaks of support while below this threshold with a break below 1.4820/36 suggesting that a more significant high may be in place for the month. Follow the progress of this trade setup and more throughout the trading week with 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

1.4894

61.8% Fib Extension

Resistance Target 2

30min

1.4934

23.6% Retracement

Bearish Invalidation

Daily / 30min

1.4987 - 1.5029

Mthly & Wkly ORH / April High / 38.2% Fib / 50DMA

Break Target 1

30min

1.5090

50% Retracement

Break Target 2

Daily / 30min

1.5150

38.2% Retracement March ORL

Break Target 3

Daily / 30min

1.5198

61.8% Retracement / ~TL Resistance / 100DMA

Support Target 1

Daily / 30min

1.4861

78.6% Fib Extension / 200DMA

Bullish Invalidation

Daily / 30min

1.4820/36

100% Ext / 50% Retrce / Last Wk’s Low / TL Support

Break Target 1

30min

1.4793

61.8% Retracement

Break Target 2

30min

1.4765

Soft Support / Pivot

Break Target 3

Daily / 30min

1.4690 – 1.4730

61.8% Retrace / 100% Extension

Break Target 4

Daily

1.4252

Head & Shoulders Objective / 88.6% Retrace

Average True Range

Daily (20)

104

Profit Targets 24-26pips

*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

Interested in learning about Fibonacci? Watch this Video

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