EUR/AUD
Pairing a strong currency against a weak currency is the foundational principle of this post. Over the weekend Adam posted about the difference between being 'good' vs being 'great' in the forex markets. One of the takeaways was the benefit of focused and applied practice. Practising identifying a weak currency pair vs a strong currency pair has to be a foundational principle of trading and one that if you are not aware of, you need to be.
At the end of yesterday's American session news hit the wires that Merkel had managed to reach a compromise over immigration with Seehofer, the German Interior minister. The EUR instantly gained on the news. This is bullish sentiment for the EUR as this issue was proving tricky and some saw the end of Merkel's political control over this issue. A EUR relief bid is the mood of the moment.
Last night the RBA kept their rates on hold, as expected. However, they did note the unstable influence of the US and it's trade spat with China. As China's economy has a direct impact on Australia's economy what's bad for China is bad for Australia and vice versa. Furthermore, with trade restrictions due to hit this week on the 6th of July this is the likely focus on the markets. Remember yesterday too I warned about the likelihood of commodities being stockpiled in advance of the 6th of July as businesses try to price in stability before the 6th of July.
So, for today, I favour a EUR/AUD long. Entry at the buy zone marked on the chart and stops below the fib level and swing low. Technically a very strong support area with good upside potential.
Risks to trade: EUR political woes, resolution in the US and China trade 'wars'.
