EUR/AUD might be ready to resume its drop, as the pair is testing the top of a falling channel on its 4-hour time frame. Stochastic is pointing down from the overbought region, indicating that bears are ready to push the pair lower.

Zooming back a little further shows that the 1.4450 to 1.4500 area lines up with an area of interest. It has served as the neckline of a double top pattern a few months back and has been acting as resistance for a while after the breakdown.

Shorting at market with a wide stop above 1.4550 could give this trade enough room to breathe. After all, this cross pair does tend to be volatile. Aiming for the bottom of the channel around 1.4100 would still yield a good return on risk. 

By Kate Curtis from Trader’s Way