EURAUD presenting a sell opportunity after the break of trend line

EURAUD has retraced most of its losses, and now I think we should be looking for a sell opportunity. There is a bearish convergence forming on the 4 hour chart as shown below, which adds value to our bearish view in short term.

Few days back, the pair broke an important up-move trend line as plotted on the 1 hour chart below and moved lower. Now the pair is getting close to retest the broken trend line. There are three resistances including 1.4475, 1.4490 and 1.4510 and I think the pair can make a stop at any of these levels.

RSI is getting close to extreme on the 15 min chart as shown below, which clearly suggest that a pullback can occur soon. In order to enter a sell trade, we need the pair to make a stop of any of the resistances, form a bearish candle pattern and MACD ticking to the downside. Initial target should be the 20 moving average on the 1 hour chart, and final target could be around 1.4350. Stop should be triggered on a 1 hour close above the broken trend line.

Reviewing yesterday’s events and trades
After the shutdown in the US, market was very cautious and no major movement was noticed. Only major movers were GOLD and SILVER, which broke down later in the US session. US ISM Manufacturing Index was released yesterday, which jumped higher to 56.2 beating the expectations of 55.0. ISM reading helped the US dollar, to a certain extent, as EURUSD, GBPUSD and AUDUSD retreated from the highs. Australia’s trade balance and building approvals data was released in the Asian session, which missed the expectations.

Fundamental Outlook for the day
There are three major events scheduled during the day starting from ECB interest rate decision and Draghi’s press conference. Later, we have US ADP Nonfarm employment change data, which is expected to show some improvement from 176K, and then we have Fed Chairman Ben Bernanke speaking late in the NY session. All these events can have a major impact in the market as US dollar is looking for direction in short term. So, keep an eye on all these events.

This analysis is taken from today’s Daily Market Forecast, which also includes trade opportunities on: GBPUSD, EURCAD, USDCAD, AUDUSD, NZDUSD, AUDNZD and DOW JONES.
Get it HERE: Vladimir’s Markets Forecast

Trade carefully friends. Happy trading!