Good morning team,
An interesting set up on the EURAUD today.
Australia is set to announce their next unemployment data, with the recent stage 4 lockdowns across Victoria we could be set for an ugly reading. Unemployment data has been getting progressively worse over the past months due to the corona-virus pandemic. Analysts are forecasting a reading of 7.8% rising from the 7.4% the month previous.
A worse than expected result could influence the RBAs next interest rate decisions and bond purchasing program. Yesterday the RBNZ increased their overdraft putting the foot on the QE program which resulted in a weaker NZD. The RBA could follow in the near future if data continues to decline in Australia.
We are looking to pair the AUD with one of the strongest currencies over the past number of months. The Eurozone has dealt with the corona-virus is a short space of time and the ECB has stepped up to the plate to support the Europe. Let’s take a look at the technicals.
EURAUD – Weekly Charts
We are seeing a series of higher lows on the weekly time frame. There has also been a hammer candle on the major support level at 1.6100.
EURAUD – 4 Hour Charts
There has potentially been a bull flag breakout. The market could now retest the bull flag formation which will also be inline with the left shoulder at 1.6412.
We are looking to buy the pair on the retest at 1.6412 level taking the pair towards the 1.6550 resistance.
Trade Setup: BUY LIMIT – Entry price 1.6420, stop loss 1.6370 and take profit 1.6550.
Stop loss: 50 pips
Take profit: 130 pips
RISKS: If the market breaks below the shoulder line due to positive data we will close the trade out before our stop loss.
If you are able to watch the announcement, wait for the retest and rejection before entering the market.
The market may not make it down to the entry point, therefore there could be an opportunity to enter a buy stop above as well.