MY EURAUD SHORT IDEA 24/11/2024

Nov 24

NOTE: THIS IS JUST A TRADE IDEA WHICH I MAY OR MAY NOT TAKE DEPENDING ON THE OPPORTUNITY PRESENTED, PRICE ACTION, AND ECONOMIC EVENTS THAT MAY HAPPEN. PLEASE DO YOUR OWN RESEARCH!

If text is glitchy please use this link

https://regal-marlin-2d3.notion.site/EURAUD-14753536bcf5805cbf17c6044387ab7a?pvs=4



President Question Template:

1. Why do you want to trade at the first place?
2. Did you take into account the current market condition, data, high impact news and what’s going on?
3. Even if you made your FA few weeks ago, you **MUST** keep on track and update it time to time.
4. Don’t just have a bias from four weeks ago and execute a trade today based on that you had four weeks ago.

So it all started looking at myfxbook.com/forex-market/heat-map and I looked at the heatmap where it showed bearish in all time frames for EURAUD especially in the Monthly.


This gave me an idea to start shorting the currency. I looked at the chart and what I found is every economic event and data is bearish for the EURO. To support my claim you can see see that there there are many events happening on the chart and every event is putting pressure on the price.


Now it is very important for me to take into account what James says here.

elitetraders.io/research23112024

> **EURO
Macroeconomic Factors:**
>
>
> Eurozone growth remains sluggish, with subdued inflation limiting the European Central Bank’s (ECB) ability to pivot hawkishly. Trade challenges persist, especially with the potential for US tariffs on European goods.
>
> ‍
>
> **Key Drivers:Wage Growth:**
>
> Higher-than-expected wage growth in Germany provides mixed signals for inflation.
>
> ‍
>
> **Geopolitical Risks:**
>
> Ongoing trade tensions with the US and challenges in the energy sector weigh on sentiment.
>
> ‍
>
> **Outlook:Short-term:**
>
> Limited upside amid weak macro data and geopolitical concerns.
>
> ‍
>
> **Medium-term:**
>
> Gradual recovery if energy prices stabilize and ECB policies support growth.
>
> ‍
>
> **Long-term:**
>
> Structural reforms and green transition initiatives could underpin stronger growth.
>
> AUD
> **Macroeconomic Factors:**
>
> Declining energy prices and a weaker Australian-US interest rate spread have pressured the AUD. Domestic growth concerns persist, with a softening labor market and mixed performance in commodity exports.
>
> ‍
>
> **Key Drivers:Monetary Policy:**
>
> The Reserve Bank of Australia (RBA) remains cautious, with markets pricing in a lower probability of rate hikes compared to peers.
>
> ‍
>
> **Commodities:**
>
> Iron ore, a key export, faces headwinds from reduced demand in China, while the broad commodity complex shows mixed signals.
>
> ‍
>
> **Outlook:Short-term (Next Week):**
>
> A slight rebound may occur if risk sentiment stabilizes globally, but volatility remains tied to Chinese economic data.
>
> ‍
>
> **Medium-term (Months Ahead):**
>
> Modest appreciation expected if China's stimulus measures translate into higher demand for Australian exports.
>
> ‍
>
> **Long-term (2025):**
>
> Structural improvements in trade balances and diversification in export markets could support AUD recovery.
>

According to what James has said, AUD will face some volatility in the next week for the short term according to risk sentiment stability and Chinese economic data. In the Medium term it depends on China’s stimulus measures which could translate into higher demand for Australian exports. As for EURO there are many weak macro data and geopolitical concerns with fear of US tariff on Euro. Euro must find good recovery in Energy prices in order for it to stabilize.

Sentiment:







COT DATA

EUR:



AUD:



So according to the sentiment data, we can see clearly that retail traders are favoring longing the position probably due to past price action where it bounces off of the price level 1.60425 and create a support zone. But even if hypothetically there is a support zone this zone is most likely about to get invalidated. Price is below 200 EMA signaling a bearish price action for the EURAUD and we can see lower lows on the RSI. As for the COT and SMART money we can notice that they are buying AUD and selling the EURO due to negative economic status on the EURO.


Order book is showing 37 ASKS position vs 24 at the 1.62 zone. Signaling more Sell positions are present at that level giving a solid resistance zone.


Calendar:


AUD CPI expected to be 2.5% by WED NOV 27 which is BULLISH especially if the number is higher than 2.5%.


EUR German Prelim CPI m/M


We can notice that that inflation is cooling down.

Correlations:

I noticed negative correlation with AUDUSD and AUDCAD but there is also a positive correlation with EURJPY.