The EURAUD has formed a narrow head-and-shoulders reversal pattern as visible in this H4 chart. We believe this pair will initiate a sharp deterioration and breakdown below its 200 DMA by a significant amount.
MACD has indicated that momentum has been fading out of this trade and we expect a bearish centerline crossover to be visible shortly after the correction has begun. RSI shows that the overall strength of this pair has been on the decline and currently trades in overbought territory.
We recommend an initial short position at 1.2705 with a potential second entry level at 1.2820. Should this pair breach the 1.2770 level to the upside we advise traders to hedge their initial short position with a long before adding new short positions to this trade.
Traders who wish to exit this trade at a loss are advice to place their stop loss level at 1.2770. We do not use stop loss level and will execute this trade as recommended. Place your take profit level at 1.2600.
