Since mid-August of last year, EURAUD has been consistently forming lower highs on our chart, negating a bullish trend that spanned over a year, a trend which was negated back in December. This year, the pair has entered into a distribution phase, with a high likelihood of establishing a new lower high.
Over the past month and a half, bears have sold every rally, particularly those near or slightly above 1.66. With the pair returning to the support zone, there is a strong possibility of a downward breakout. In such a scenario, EURAUD could accelerate its losses, potentially dropping below 1.6, a movement of around 500 pips.
Moreover, such a trade could potentially offer a remarkable risk-to-reward ratio of 1:4 to 1:5.
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