Forex Traders Report EUR/AUD

The Euro is testing a key psychological price level of 1.5000 against the Australian dollar. The first chart shows the broader daily price action of the EUR/AUD over the past nine months.

There was a head and shoulders pattern which formed over the months of December to February with the neckline at the key price level of 1.5000. This price level is an important for several reasons

1. The August and September highs of 2013 formed at this price
2. It is a nice round number figure which tends to hold more importance

Over the past few weeks there has been a rally in the price of the Euro back to this key level of 1.5000. The Euro is now re-testing the neckline support level which should now act as resistance like it did in August and September 2013.

Yesterday’s candle stick showed a failed breakout with a long tailed upper wick and a bearish closing price.

CHART 1. EUR/AUD

 

The second chart shows a closer view of the daily price action. The current rally in prices has reached the 38% Fibonacci retracement of the downtrend from the March high of 1.5550 to the April low of 1.4550. This adds further confluence of technical signals in favour of further price declines.

 

CHART 2. EUR/AUD

Based on the above factors traders can look to go short the EUR/AUD with stops being placed above yesterday’s candle stick high of 1.5020, with a possible target of 1.4700 which is just above the most recent pivot low formed in mid April.

Happy Trading

Flavio