Looking at a short setup on Euro versus Australian dollar after last nights data out of Australia coming in at 1.3% versus 1.5% expectation leading to a 140 pip spike higher in this pair. The miss on suggests, in simple terms, points to slowing growth and creates a lower expectation of the Australian raising interest rates. In fact there is growing expectations that they may instead need to cut interest rates due to a slowing economy and a housing market that is extremely overheated.
Back to the technicals on this pair, so the spike of 140 pips has taken the pair up to a that dates back to early March. The spike itself was on very low volumes when compared to recent trading and as such was not able to break through resistance and is currently 40 pips off the headline spike. Unsurprisingly the move shows as over valued on every technical indicator. We are looking to take advantage of a pull back from these highs with expectation that the bulk of the move back lower will occur overnight during the Sydney trading session.
As always this is not a trade recommendation and simply technical observation.
Good luck trading
from the Team at forexTrdr
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Stop loss set to entry and now a risk free trade
Spike on headline, into overbought, bounce of resistance and pulling back