Free Profitable Forex NewsletterÂ
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Hey! This is Philip with this week's trade idea of the Free Profitable Forex Newsletter!
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An interesting situation on the charts, coupled with almost guaranteed volatility in the next two days due to a busy calendar, makes EURAUD an attractive tactical trade opportunity at the moment.
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The next two days will be busy - High-risk events on the AUD & EUR calendarÂ
The idea behind this trade is simple. Going into the risk events tomorrow and on Friday, the Australian Dollar seems a little better positioned than the Euro; thus, the probabilities favor a lower EURAUD rate after the events. However, do note that there may be volatile price action around these events (especially Australian Employment and the ECB meeting).
In addition to these two events, the European manufacturing and services PMI survey reports will be in focus. In fact, considering that no big changes are expected from the ECB, the PMI reports would be more potent for sending the Euro lower across the board if they remain overwhelmingly weak (and are weaker than the forecasts).
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Technicals / Trade Plan
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But, aside from the fundamental factors around these events, the technicals are what make this setup quite attractive. Taking a look at the daily chart, we can see that EURAUD is respecting a resistance trendline since August 2019. And, today it is getting rejected at this trendline, which was almost precisely respected every time the price touched it (see chart).
Digging a bit deeper into technical analysis, we can take a look at the two major pairs that are related to EURAUD, namely AUDUSD and EURUSD. And here too, the separate technical situation on both EURUSD and AUDUSD is also supportive of bearish price action on EURAUD:
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- AUDUSD is trading at an important weekly support trendline (in fact what is confluence support); and
- EURUSD was rejected at the weekly resistance trendline last week and now seems to be falling through support
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Looking for potential targets, we can see from the same daily chart that EURAUD is also respecting a support trendline in the 1.60 area since about the same time (summer 2019).
Considering all of the above, it looks like EURAUD can slip lower from here toward the 1.6000 price area. The 1.5950 lows would also be within reach, and that could stretch down to the 1.5900 round number as well.
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- Look to enter near current levels (1.6200 area resistance) ahead of the calendar events.
- Alternatively, look to enter after the Australian employment is released. The volatility may even provide you with better entry levels and another confirmation that resistance is holding.
Stop loss:
- At least above today’s high of 1.6230;  The resistance area is quite wide here so some bigger breathing room would be appropriate
- Placing the stop higher (e.g. up to 1.6270) would allow more breathing room for this trade
Target:
- The 1.6000 area;Â
- Possibly this could extend down to 1.5950 or even 1.5900
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Note:Â This trade is a relatively higher risk trade compared to our usual trade signals. That is mainly because of the high-risk events scheduled on the calendar in the next two days (both from the Eurozone and Australia).
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Trade signals from the past week
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- January 22, 2020 – Short USDJPY from 109.90 (now in progress); trade idea sent on January 15
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TOTAL: +0 pips in the past week
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TOTAL: +2490 pips profit since October 1, 2018
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If you have any questions or feedback, don't hesitate to reply to this email.
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Thank you!
High Risk Warning: Please note that foreign exchange and other leveraged trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary.
Any opinions, news, research, predictions, analyses, prices or other information contained in this newsletter is provided as general market commentary and does not constitute investment advice. FX Trading Revolution will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.
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