FxWirePro: Capitalize on EUR/AUD Rallies to Deploy Shorts Upon a "Neckline Breach of Double Top"
On weekly chart, we spotted out a break below “Neckline of Double Top” at around 1.4696 levels with a bearish candle of big real body.
Earlier on daily charting also, we’ve seen a double top formation and subsequently, the bearish effects after the break below neckline.
Thereafter, major downtrend prolongs in descending triangle.
We could observe intensified bearish momentum as the pair has tumbled to break below major supports at 1.4665 levels.
Robust volumes are conformity to these down steaks. Amid this bearish trend we see the current price have slide below 21DMA on daily chart and EMAs on weekly charts.
Both leading and lagging oscillators indicates bearish momentum by converging downwards to these price dips on monthly charts. RSI: Currently, RSI (14) on weekly is converging downwards to the prevailing price dips to signal selling pressures. Stochastic: This leading oscillator on weekly has approached oversold territory but no convincing bullish crossover yet.
Daily MACD also signifies the ongoing downtrend to prolong further. We think, in a long term bears' intensity is strengthening as there are no signs of strong buying sentiments so far.
Thus, the recommendation is to use the rallies to go short in near month futures contracts for targets towards 1.4445 levels with strict stop loss at 1.4696.
The short futures position can also used by traders to lock in a trading price of a FX that he is going to sell in the future. Please be noted that as the expiry period approaches, the futures price converges to the spot FX of EURAUD.
The material has been provided by InstaForex Company - www.instaforex.com