Monday, 13 May 2013

EURAUD, a risky matter

Hi Traders,

The EURAUD is now at 1.3000. The weekly chart below shows a nice downtrend followed by a clear "round formation".

When this occurs (long downtrend + round pattern) analysts usually project (one or twice) the distance between the low at 55 and the "neckline" to get some idea of the targets. The targets so calculated are: 1.2910, 1.4205 and 1.5487.

Well, plausible but this time there might be a catch. 

SETUP

Check the waves after the low at 55: they don't seem to have the strength to get to 1.42 (yet) and the whole group of waves looks more like a continuation pattern of the previous downtrend.

If this is correct, the EURAUD may not be able to go through the area 1.3160-1.3228 and, even in the event that it gets to 1.33 it should still retrace to 1.2150.

For the "magicians" of timing, note the 12 weeks cycle that should mark the top of wave 5 this week.

click the chart to enlarge



Note also the cycle of 126 trading days in the daily chart below. More importantly, starting from the low at c4, we might have already 4 waves in place with the 5th one on the way to the area 1.3160-1.3228.



click the chart to enlarge



TRIGGER

Keep an eye to your own 4-hour chart and especially your own 1-hour chart to be able to get the new top.

If this is followed by a nice reversal candlestick + a reversal pattern in the "wave oscillator" you have your entry point downward.

Finally, check the channel in the 4-hour chart below. The pair touched the channel 4 times already. This is usually an indication that the breakout is not too far away.


click the chart to enlarge

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