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Short-term trading idea FX EUR/AUD - bear speculation: expected breakout of the trend line

Trading opportunities on the currency pair: A doji has formed on the weekly chart. On Friday the 26th of May, trading closed with the formation of a reversal hammer. Between the price and the AC indicator, a double bearish divergence has formed. This increases the risk of a breakout of the TR3 trend line. I'm predicting some correctional movement towards the TR4 line at 1.4690. This scenario for decline will remain in place unless the price manages to break out of the 1-1 channel.

Background:

I started publishing ideas on the EUR/AUD pair on the 16th of January of this year when the Aussie dollar was worth 1.4181 USD. The pair has since seen a fall of 554 pips. First, sellers shifted the support to 1.4074. Having reached their first target of 1.3774 (-407 pips), they proceeded towards their second target of 1.3400. I reduced this from 1.3679 level. However, sellers didn't manage to hold below the zone from 1.3679 - 1.3774. As oil quotes started to fall, and the Aussie dollar fell against the US dollar, the EUR/AUD rate bounced from 1.3627. After a breakout of the trend line, the second target became unreachable.

Weekly chart. Source: TradingView

I had been expecting to see a reversal in movement after the 6th of March, but the price changed direction on the 22nd of February. In my review on 16/01/17, I wrote that the cross likes to changes direction after the appearance of a signal pin bar. These instances are all indicated on the weekly chart. A candlestick with a long shadow formed at 1.3627 level, from where the Euro's rally started.

The pair's growth accelerated after the end of the first round of voting in the French presidential election. The EUR/AUD rate restored to 1.5111. the price then stayed around the upper boundary of the 1-1 channel, which runs through 1.5245 level.

So, if the price didn't make it to the boundary, why did I choose this currency pair for my trading idea? The thing is that on the daily timeframe, there are some signs that the pair is set to fall. On the weekly chart, a doji formed after the OPEC meeting took place last week. This is not a reversal candlestick, but it does signal the end for the bullish trend. Should oil prices continue to recover, we could see the rate fall again as it did in December 2016.

Daily chart. Source: TradingView

The upper boundary of the 1-1 channel runs through 1.5245. If sellers don't manage to push the price below the doji, then we'll have to wait for a new pin bar to form on the weekly timeframe. I'm expecting the 1st of May through to the 3rd of June to be a bearish phase for this pair.

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