The monthly trend on EURAUD suggests we could see the price move lower however what do we need to see before looking for the downtrend opportunities?
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The monthly time frame on EURAUD shows the price forming a new low. In this market situation we would look for the market to return back to the previous lows to find resistance, then look for an opportunity to trade the trend.
Last month’s price action at the previous lows show indecision which could lead to another impulse in the downtrend. When this happens we should see the daily time frame form lower highs and lows.
The Monthly Impulse phase
As we can see from the chart the previous impulse phase does show the daily in a strong downtrend forming lower highs and lows. This is what we expect to happen next in the current market situation. As this example shows we need to identify the areas of resistance to look for short downtrend opportunities.
The Daily Time Frame
The daily time frame is currently showing us the price is at some support, this could cause a retracement phase which we need to see in order to identify the lower high for short opportunities.
The previous swing lows would be the ideal area to look for these opportunities by identifying bearish price action.
If the market forms a bearish rejection of this zone on the daily time frame we can start to look for the downtrend opportunities.
The 4hr Time Frame
If the 4hr forms a higher low and a higher high we can confirm the daily time frame retracement phase. In a daily downtrend retracement phase the 4hr should make a slight uptrend.
This can offer counter-trend opportunities in the short term if the price does head towards the swing lows.
When the price gets to this zone we can look for a double top pattern or a head and shoulders pattern for short opportunities.
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