EUR:AUD – Potential for bulllish reversal

Hi,

A strong close on today’s candle would represent a buy set up using the Bollinger Band W reversal strategy we often feature in the blog.

EUR:AUD Daily. Source: Bloomberg

The daily chart is close to completing a double bottom or W formation. This set up looks for those W set ups where the Bollinger Bands suggest an enhanced chance of trend reversal. This is indicated by the first trough in the W being under the lower band but the 2nd one occurring above the band.

The set up is triggered when price closes above the high of the candle making the 2nd trough. If this happens on the current candle it is likely that it would also close above the 20 period moving average i.e. the middle band. This would be another positive indicator of trend change.

One approach to exit strategy is to set the initial stop just under the last trend trough and to move it up behind any corrective troughs in the uptrend if it gets under way

Cheers

Ric

About Ric Spooner

Over 30 years market experience - professional trader, broker, director
This entry was posted in Forex, Market, Trading. Bookmark the permalink.

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