The rate hike from ECB was greeted with market optimism, as EUR/AUD is seen rising and testing the 1.5450 supply zone.

Hi fellow traders! EUR/AUD is rising amid market anticipation toward the ECB's interest rate decision. Market participants are optimistic that ECB will raise interest rates by 50 bps. As a result, EUR/AUD is advancing to test the 1.5450 supply zone.

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Analysis and Recommendation

Let's take a look at the following EUR/AUD H4 chart below: 

euraud2

Based on the H4 chart above, it has been pointed out that EUR/AUD is rising to test the supply zone of 1.5450 – 1.5507. Given that there is no apparent bias, there are two opportunities to test the area. The first opportunity is to open a short position when the price is rejected from the 1.5450 supply zone. 

Meanwhile, the second opportunity is to open long when the price penetrates the 1.5507 level since EUR/AUD will continue to rally when prices manage to break that level, especially if the ECB rate hike announcement is in line with or above expectations.

Here are two trading scenarios that you can try:

  • Set a short position at 1.5450 when the price manages to enter the supply zone and a bearish signal confirms it. Stop loss may be positioned at 1.5507, while the profit target is at 1.5310.
  • Alternatively, set a long position at 1.5507 when a significant breakout signal confirms it. Stop loss may be positioned at 1.5450, while the profit target on 1.5653.

Keep in mind to always use risk and money management before trading! In addition, to make use of trailing stops, don't forget to exit the market as soon as you find a reversal signal!

EUR/AUD key levels: 

  • Resistance: 1.5754, 1.5653, 1.5507, 1.5450
  • Support: 1.5310, 1.5240