Hi Traders! EURAUD forecast follow up and update is here. On July 1st I shared this “EURAUD Forecast And Technical Analysis” post in our blog. In this post, let’s do a recap of this setup and see how it has developed now. If you would like to learn more about the way we trade and the technical analysis we use then check out the Traders Academy Club. Spoiler alert – free memberships are available!
My Idea
On the H1 chart we have a bearish divergence that has formed between the first high that has formed at 1.58271 and the second high that has formed at 1.58598 based on the MACD indicator. The price then moved lower and broke below the last low at 1.58132 thus forming a classical setup of bearish divergence followed by bearish convergence, we may consider this as evidence of bearish pressure. As per the book scenario after a bearish convergence we may expect corrections and then further continuation lower. Currently it looks like a correction is happening. So based on all this my view here is bearish and until the strong resistance zone shown in the image below (marked in blue) holds I expect the price to move lower further in the short term.
EURAUD H1(1 Hour) Chart Current Scenario
Based on the above-mentioned analysis my view was bearish here and I was expecting the price to move lower further until the strong resistance zone holds. The price action followed my analysis exactly as I expected it to here. The price which was moving higher reached the strong resistance zone, respected it and bounced lower from this zone, delivering 260+ pips move!
The market provided us with various facts supporting the bearish view here. On the H1 chart we had multiple false breaks with bearish divergence that has formed between the first high that has formed at 1.58438 and the second high that has formed at 1.58782 based on the MACD indicator which we may consider as facts provided by the market supporting the bearish view. Most importantly the price was holding in the strong resistance zone and there were no signs opposing this bearish view. Also, the price which was moving lower broke below the most recent uptrend line which we may consider as yet another fact provided by the market supporting the bearish view. Then as you can see in the image below how the price moved lower after that.
(Note: You can learn about a Killer Forex Strategy “Double Trend Line Principle” here)
As traders we always have two choices, the first one is to fall in love with our analysis and try to convince the market and expect the price to move in the direction as per our wish. The second one is to follow the facts that the market provides us and make the right actions according to that. As you know the first option won’t help us and as you can see in the example above what happened when we followed the facts that the market hinted us and took the right action according to that.
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If you have any further questions, don’t hesitate to drop a comment below!
Happy Trading!
Yordan Kuzmanov
Chief Trader at the Traders Academy Club
