Forex Trade Signals and Setups

Like its other anti-podean pair (the Kiwi), the AUDUSD got hammered last Thursday breaking the stalemate in the range play going on for 8 days.  After selling off to the 38.2% fib of the last major upswing (.9650 – 1.0350) at 1.0075, the pair pulled back perfectly to the 20ema, then rejected off of it to pullback to the prior swing low at 1.0047.




What is unique about this pullback (the 2nd time) is how it has formed back to back inside bars which are using the aforementioned fib as resistance.  Traders should watch for breaks of the lows for further selling as their cue to either add onto their positions or take new ones.  First target would be parity but after that, look for .9921 and then .9750 for price action cues if the buyers are game to enter the field before the holidays.

EUR/USD – Last Stand Before the Holidays

After having a prior week of chop suey, the EUR/USD had an aggressive day of selling today hitting the key swing lows of 1.3154 which was the major swing low back in Oct. and had not been seen since Jan. earlier this year.  Last time it touched this level, the pair formed a piercing pattern and then went on an aggressive 1150 pip run, only to lose out to gravity and the Eurozone dilemma.




We feel this is the last major stand for any bulls in the market for if this level does not hold, we’d be shocked (barring a superman rescue of the eurozone – unlikely) if bulls would add on any new positions before the holidays take full effect and liquidity drains out of the market till the start of the new year.  So traders should be on the alert for a price action breakout-retest of this level on the 1hr or 4hr time frames.

If this setup occurs and a legitimate break plays out, we expect some strong downside play as technical models will add on shorts while stops will likely be tripped.  Another option is taking pullbacks to the 20ema for selling on rallies but we have ye little faith in a Bulls on Parade maneuver (ala Rage Against the Machine).