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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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One month ago, we looked at the EURAUD pair and suggested a long entry might prove profitable over the following weeks.Â
That did not happen then, and the trade was not triggered as EURAUD stayed below the resistance trendline and inside the descending channel formation. But, EURAUD finally broke out of this channel a few days ago. Hence, we are revisiting this trade because the general rationale for higher EURAUD that we established then still remains true today.
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A Correction in Overbought Aussie Should Help to Push EURAUD higher
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As we said back then, The prospects for a higher EURAUD exchange rate over the coming days and weeks are based on two premises as a function of EURUSD and AUDUSD:
- EURUSD price action is strongly bullish, resembling the stellar 2017 rallies in some ways. It seems little can deter the bulls from taking EURUSD toward the 1.16-1.17 area.
- AUDUSD has reached the major 0.70 monthly resistance area and is high in overbought territory. A broader correction in risky assets is long overdue, and if it happens, it should take the Aussie down as well.
While a possible disappointment of the EU summit tomorrow poses a somewhat higher risk now for EURUSD to reverse and correct to the downside, the bullish rationale largely holds true. That is mainly because a correction in AUDUSD is long overdue. Thus, AUD should remain weaker than EUR, even in case if
EURUSD would correct lower.Â
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Below we show the technicals, and we can see how the price broke the resistance trendline this week.Â
It's worth noting that this channel's lines held the price very accurately for around 4 months before the breakout this week. Such breakouts of clearly defined channels usually are real and result in continuation moves in the direction of the breakout.Â
However, as always in trading, there is no guarantee for something to happen and that's why we must always use protective measures.
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Looking at the upside, the 1.70 and 1.75 areas - which are the 23.6% and 38.2% Fib retracements - are potential targets. Look to enter around current levels (1.6380), or if possible, closer to the 1.6300 handle on potential intraday retracements.Â
The stop can be placed below yesterday's low at 1.6250. The low at 1.6150 from July 7, should hold if this trade is going to work well. So, that level can be used as a stop also if you want to allow greater breathing room for this trade.
- As explained above, look to enter around current levels (1.6380);Â
- or, if possible, closer to the 1.6300 handle on potential intraday retracements toward the rising trendline
Stop loss:
- below the 1.6250 low; or
- below the 1.6150 low
Targets:
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Trade signals from the past week
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- July 3 - Long USDCHF from 0.9460 on the successful test of support (in progress as explained above)
- July 8 – Short EURGBP from 0.8990, stop triggered at 0.9015 = - 25 pips
- Short AUDUSD (not triggered yet) - trade idea sent on July 10
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TOTAL: -25 pips in the past week
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TOTAL: +2700 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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