Talking Points:
- A Preferred Lineup of Indicators
- Strong Case for Upcoming EUR/AUD Weakness
- 6 Technical and Fundamental Factors to Consider
I’m often asked by retail traders how I go about setting up my chart and which indicators I use. Obviously, there are a seemingly infinite number of choices and variations there, and in the end, there is no one “right” way to do it, however, I prefer to trade using:
- A very short-term moving average (Hull)
- 20-day moving average (MA)
- 100-day MA
- Bollinger bands
- Commodity Channel Index (CCI)
- Moving Average Convergence Divergence (MACD)
- Support, resistance, and trend lines
- Parabolic SAR (sometimes), which is used to ascertain stop losses
Using these indicators to facilitate analysis, it appears that EUR/AUD represents a great short opportunity right now. The underlying fundamentals, as well as several technical signals on the daily chart below, all indicate the potential start of a new downtrend.
Guest Commentary: Technical Case for a New Downtrend in EUR/AUD
The following are all factors that support the case for upcoming EUR/AUD weakness:
- MACD has recently shown declining upward momentum and is now suggests increasing downward momentum. The histogram is showing a new move into bearish territory
- CCI has confirmed price falling into sell territory and has done so with conviction
- Bollinger band is tight with a new break downwards. Constricting bands indicate a possible spike in either direction
- The end of head and shoulders pattern is evident on the chart
- The 20-day MA is starting to fall with price moving below the line, potentially indicating the start of a long-term downtrend
- The Australian dollar (AUD) has benefited from capital flight from China and comparatively higher interest rates. Risk appetite for more diverse currencies is increasing as well.
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