EUR/AUD bullish reversal in play: 1:2 rr potential

October 09, 2023 06:48 AM PDT | By Invezz

EUR/AUD bullish reversal in play: 1:2 rr potential — Image source: Invezz

EUR/AUD trading strategy

Buy EUR/AUD
Entry price: 1.6560 – 1.6600 area
Stop loss: 1.63
Leverage: 3x
Take profit 1: 1.69
Take profit 2: 1.7150
Timeframe: 2-3 weeks
Risk-reward ratio: 1:2

EUR/AUD chart & technical analysis

EUR/AUD is one of the most volatile currency pairs on the FX dashboard. It is usually associated with risk-on/risk-off market movements, meaning that it rises in periods of uncertainty and declines when market sentiment is positive.

After dropping from 1.70 to 1.63 since the middle of August, EUR/AUD forms a bullish reversal pattern – an inversed head and shoulders. Its measured move is only the minimum distance the market should travel, and so I’m looking for a new marginal high while the price holds above 1.63.

Euro fundamentals

Rising oil prices (i.e., energy prices) are negative for Europe and the common currency. Also, the ECB has been very vocal, stating that it had reached the terminal rate. Hence, the fundamentals do not bode well for the EUR.

However, EUR/AUD is a cross pair. It means it moves based on the differences between EUR/USD and AUDUSD. My take is that it will make a new marginal high on EUR/USD, outperforming AUD/USD.

EUR to AUD trade idea takeaways

The risk-reward ratio is an attractive one, 1:2
Look for the market to accelerate once above the neckline
1.70 should be a pivotal level
A move below 1.63 would invalidate this scenario

The post EUR/AUD bullish reversal in play: 1:2 rr potential appeared first on Invezz

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