Day four: our potential EUR/AUD trade

While my target remains 1.40 for EUR/AUD, I feel like traders could take profits at market (1.4375 at the time of writing), potentially locking in 150 pips or 1%.


Following on from my potential trade idea yesterday, on the daily chart the nine-day RSI is at 18, which is the lowest level since November, while price is 2.6 standard deviations below the 20-day moving average. It could feasibly squeeze lower of course, but the risk for me now is the pair undergoes short covering to which I want to re-enter shorts.

On the hourly chart we are actually seeing triple divergence between price and the RSIs. Again, this could suggest a reversal.

On the daily chart the key level for me is 1.4555 (the 38.2% retracement of the latest sell-off), however this seems like a good level to place stops as it’s hard to see what will cause the pair to rally here in the short term. I would look to work offer into 1.4450, which is just under the downtrend resistance drawn from the June 4 pivot. I will update the idea if the pair trades here.

IG Charts

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.