Preparing for the publication of important statistics in Australia
In this review, we want to consider the dynamics of the currency pair euro against the Australian dollar. Is there a possibility for EURAUD quotes to decline?
It means the weakening of the euro against the Australian dollar. The dynamics of the Australian dollar may depend on the data on wages in Australia for the Q4 of the last year. Their publication is expected on Wednesday, February 21, 2018. The Reserve Bank of Australia (RBA) does not exclude an increase in the rate, which currently is 1.5%. The next RBA meeting will be held on March 6, 2018. At present, the European Central Bank (ECB) rate is zero. The term of the current ECB President Mario Draghi ends next year. Some investors believe that the President of the Deutsche Bundesbank Jens Weidmann will take his place. In their opinion, the likelihood that Mario Draghi will raise the rate before his retiral is not high. The next ECB meeting will be held on March 8, 2018. On Wednesday, the indicators of Manufacturing, Services and Composite PMIs by Markit will be released in the eurozone. They are expected to slightly decrease.
On the daily timeframe, EURAUD: D1 came out of the rising trend. The further decrease is possible in case of the publication of positive economic news in Australia, and negative one in the eurozone.
- The Parabolic indicator gives a bearish signal.
- The Bollinger bands have widened, which means higher volatility.
- The RSI indicator is above 50. It has formed a negative divergence.
- The MACD indicator gives a bearish signal.
The bearish momentum may develop in case EURAUD drops below its last fractal low at 1.56. This level may serve as an entry point. The initial stop loss may be placed above the last fractal high, the 1-year high and the Parabolic signal at 1.582. After opening the pending order, we shall move the stop to the next fractal high following the Bollinger and Parabolic signals. Thus, we are changing the potential profit/loss to the breakeven point. More risk-averse traders may switch to the 4-hour chart after the trade and place there a stop loss moving it in the direction of the trade. If the price meets the stop level at 1.582 without reaching the order at 1.56, we recommend cancelling the position: the market sustains internal changes that were not taken into account.
Summary of technical analysis
| Position | Sell |
| Sell stop | below 1,56 |
| Stop loss | above 1,582 |