The trends of EURAUD

EURAUD is a quite complicated asset because the markets are located in different time zones and are opened at different time. Moreover, Australia is very far geographically and has its own vision of the economy.

Basic arguments

Recent sharp revision of the AUD price has its impact on the trading process and messed everything up. However, we could see a correction after the sharp growth, which resulted from the reversal to the fair price due to the decreasing of the interest rate by the Reserve Bank of Australia at the beginning of July. Current rate shows the continuation of the trend even with possible increased volatility.

Technical arguments

Despite the fast increasing and emerging a new EURAUD trend, further correction is rather systematic and protected for the market. So, it means that the continuation of a correction is not finished yet and will take its place soon.

Analysis of big traders' positions

Picture 1. A price chart of EURAUD and an indicator of big traders for the period of 03.07.2019 - 03.09.2019.

As we can see in picture 1, a sharp growth of positions got to a local maximum and remained subdued. It means that soon we can see a correction due to the difference in investments in EUR and in AUD.

Forecast

Keeping in mind all the information above, we can see that the asset will have a DOWNWARD trend. The growth of AUD to its maximums as well as the current trend and sharp volatility growth indicate it.

For better control of the positions, we recommend to use the following indicators:

• RSI (Relative Strength Index)
• Bollinger Lines

RSI helps to recognize when the market is about to change its trend, as well as to see maximums and minimums. Bollinger Lines helps to know when the market is ready for a new cycle of volatility.

We recommend keeping the average ratio of 4 trades "down" and 3 trades "up" in order to keep the level of risk moderate.