The EURAUD has reversed its rally as the breakout above its resistance area, visible in light grey in the above H1 chart, lost its upward momentum and quickly reversed into a breakdown. The shift in momentum also stopped the rise in all three bands of the Bollinger Band indicator which are now pointing towards a sideways trend. The upper Bollinger Band is trading above its resistance area while the lower band is trading below its resistance area and the middle band is trading inside of it.
Forex traders may take the sideways trend as a reason to realize floating trading profits and close open long positions. This will push the EURAUD to the downside. This currency pair is trading between is lower Bollinger Band and its middle Bollinger Band; a breakdown below its lower Bollinger Band is expected to further enhance the profit taking sell-off and this can take the EURAUD down to its support area which is visible in light blue.
There is no major support level between its resistance area and its support area and forex traders are advised to seek out short entries above 1.4325 in order to position their forex portfolios for the expected sell-off. Conservative forex traders may wish to wait for a confirmed breakdown below the lower band of its Bollinger Band indicator. A take profit target of 1.4000 has been selected for a potential profit of 325 pips.
Forex traders should protect this trade with a stop loss level at 1.4500 for a potential trading loss of 175 pips which will result in a Risk-Reward (RR) ratio of 1.86.
EURAUD
Short @ 1.4325
TP @ 1.4000
SL @ 1.4500
RR: 1.86
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