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EUR/AUD Sits on the 20DMA

6/26/2013 4:25 PM

The uptrend on the EUR/AUD corrected lower to the daily 20 period SMA close (aka 20DMA) triggering an aggro swing buy. This entry is based upon the continuous green GRaB candles and the 12 to 2 o’clock uptrend of the 34EMA Wave. The uptrend opens up swing buys on pullbacks as the overall psychology of the pair remains bullish.


The fact that the 1.40 handle is also in play makes for excellent major psychological level support as well as the option to put in a “cheated in” stop loss on the entry. While the trend is up, this is an aggressive level because of the shallow correction, the conservative entry waits much lower at 1.3780 just above 34 period EMA high and taking the 200-plus heat down to this level makes little sense considering the 1.4400 upside ceiling.


Raghee Horner


The POV (point of validity) for the entry which is the risk-based stop loss is at 1.3570 making this a potentially “expensive” trade if the aggressive entry is held past the 1.3980 level which would be a solid cheated-in stop loss that offers support around 1.4000 to kick in but not wait around for too much bearish momentum if the major psychological level fails to support the pair.


Raghee Horner


I call this recalibrating. I will be willing to buy into pullbacks at the two levels I specified but only the conservative 1.3780 entry makes sense to hold until the POV. A break of 1.3080 would be an excellent area to reexamine the near-term momentum.


Notice that the pair has an average pip movement of 110 to 120 pips per day so this cheated in stop loss does NOT account for the daily range but rather the 1.40 handle.

Categories: | Forex | Technical Analysis |
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