The EURAUD cross has experienced a strong upward movement that brought its value beyond the top of a descending regression channel. After topping the upper line, which, as we know, is 2 sigmas above the mean line, the price has made a consolidation on the line, making a series of lower highs.
Currently, the current 1H bar is making an engulfing pattern and managing to break the recent lows, which acted as supports for the action.
If that happens, the pair may experience a corrective run to the mid of the channel. This setup has a 2.28 reward-to-risk ratio, therefore, suitable for a controlled trade on the short side, using a sell-stop order that triggers below the recent lows.
Entry: Sell-Stop at 1.6295
Risk and Reward
This trade setup has a risk of 52 pips and a 118 pip reward. Then, the dollar risk is 377 USD on one lot, 37.7 USD on a mini-lot, and 3.77 USD on a micro-lot. The reward is 855 USD on a lot, 85.5 USD on a mini-lot, and 8.55 USD on a micro-lot.