News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.



Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events


Economic Calendar

Economic Calendar Events

Free Trading Guides
Please try again
Wall Street
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • Risk management is one of the most important aspects of successful trading, but is often overlooked. What are some basic principles or risk management? Find out from @PaulRobinsonFX here:
  • The Japanese Yen is eyeing the upcoming Bank of Japan rate decision and CPI figures, but JPY crosses will likely remain dependent on broader market sentiment. Get your weekly $JPY forecast from @FxWestwater here:
  • Consolidation or bull flag? A bull flag is a continuation pattern that occurs as a brief pause in the trend following a strong price move higher. Learn how to better spot these formations here:
  • Crude and Brent oil are on track to extend higher as Gulf Coast supply disruptions and a positive OPEC report bolster sentiment. Uranium is on a massive surge, aided by the famous Wall Street Bets group. Get your market update from @FxWestwater here:
  • RT @michaeljburry: Read thread.
  • The Australian Dollar has retraced from August lows when looking at AUD/JPY and AUD/CAD. However, the AUD/NZD downtrend is intact, will a reversal there appear as well? Find out:
  • The S&P 500, Dow Jones and DAX 30 could be at risk of falling as retail traders continue increasing their upside exposure in these indices. What are the key technical levels to watch for? Find out from @ddubrovskyFX here:
  • The US Dollar continues to hold its ground against most ASEAN currencies as recent downtrends lose momentum. What is the road ahead for USD/SGD, USD/THB, USD/PHP and USD/IDR? Find out from @ddubrovskyFX here:
  • The Canadian Dollar has been caught in broad ranges against the Euro and the US Dollar, but can the upside bias in USD/CAD and EUR/CAD prolong? Find out here:
  • Want to hear my thoughts on the US Dollar? Check out yesterday's recording with #AuzBiz hosted by @KaraOrdway on 'The Trade' We discussed a #USD index, Treasury yields, $USDJPY, $AUDUSD and $NZDUSD
Selective Countertrend Set-up in EUR/AUD

Selective Countertrend Set-up in EUR/AUD

Todd Gordon, Technical Strategist

Talking Points:

  • Longer-Term Uptrend in EUR/AUD
  • Elliott Patterns That Support the Short Side
  • Step-by-Step Parameters for Taking This Trade

While EURAUD has risen strongly for almost 18 months, this set-up involves a potential countertrend trade with a favorable risk profile. It doesn’t require trying to “pick a top” in search of a huge home run, but it’s worth considering nonetheless.

The daily chart below shows that EURAUD made a low near 1.16 in August 2012 and was supported by an uptrend line. The pair then rose by 34% to reach the late-December-2013 high at 1.5596.

We’re not suggesting that the uptrend has ended, however, or that 1.5596 is a significant top. Instead, with no evidence to the contrary, we’re presuming that the uptrend is likely still in progress, but because price is currently a long way above the trend line (after a sharp rise from early November), there is an opportunity for EURAUD to correct back to the trend line.

Guest Commentary: 17-Month Uptrend in EUR/AUD

Selective_Countertrend_Set-up_in_EURAUD_body_GuestCommentary_ToddGordon_January21B_1.png, Selective Countertrend Set-up in EUR/AUD

The daily analysis alone, however, isn’t enough to formulate a trade plan, so we’ll also use Elliott wave analysis from the 1.5596 high to see if there might be a wave count confirming the case for a move lower, even if only a short-term corrective one.

The below six-hour chart beginning at the 1.5596 high sees a sharp impulsive move down to 1.5115. We don’t know if this is the start of a new impulsive move lower or the start of a correction, so we’ll call it “(i)” or “(a).” Price then moves in a three-wave (yellow a-b-c) expanded flat to 1.5507, which we’ll call “(ii)” or “(b).”

The conservative count considers this a corrective wave (blue (a)-(b)-(c)). During the expanded flat, EURAUD made a low of 1.5029.

Guest Commentary: Elliott Wave Price Action in EUR/AUD

Selective_Countertrend_Set-up_in_EURAUD_body_GuestCommentary_ToddGordon_January21B_2.png, Selective Countertrend Set-up in EUR/AUD

Since the recent high at 1.5507, price has moved lower to 1.5336 in what seems to be five small waves. From there, it appears to be correcting higher, which provides an opportunity to set up and enter a short trade.

From an Elliott wave perspective, the move lower to 1.5336 is a first (yellow) wave from 1.5507. A second-wave pullback seems to be in progress, which typically retraces 50%-61.8% of the first wave.

Short Trade Idea for EUR/AUD

To trade EURAUD on the short side right now, we’ll nominate a limit entry at 1.5435. Our stop will be placed above the recent high at 1.5515 (which also allows for the spread). With an 80-pip stop, we’re looking for one or more targets at least 120 pips away (at least 50% larger than the size of the stop).

As we’re calling this a corrective move, the move from 1.5507 should at least move below the recent low of 1.5029. Therefore, we’re going to nominate two targets, the first being 1.5195 (240 pips away), and the second at 1.5035 (just above the recent 1.5029 low), which is 400 pips below the entry.

How to Effectively Manage Risk

The risk profile for both of these positions is unusually high (3:1 and 5:1, respectively). This is deliberate because as a countertrend trade, it carries higher risk than trading with the trend.

This also allows us to place a smaller position size than normal (say, 30%-50% of a typical trade). By risking less, if the trade goes against us, our account is reduced by a fraction of our typical trade risk. However, if the trade succeeds, our account is increased by a “typical” trade profit. Regardless, more conservative traders may choose to pass on this set-up.

Step-by-Step Trade Parameters

  • Position Size: Risk between 30% and 50% of a “normal” position
  • Trade: Sell EURAUD at 1.5435
  • Stop Loss: Place stop at 1.5515
  • Trade Targets: Two separate target levels, the first being 1.5195 and the second 1.5035
  • Trade Management: If price reaches 1.5195, lower the stop from 1.5515 to 1.5435

By Todd Gordon, founder,

Receive three free months of premium trade signals and analysis by visiting

Disclaimer: Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors.

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