EUR/AUD Daily Price Forecast – 12th February 2025

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Trade Summary:

EURAUD
Buy Stop @ 1.64740
TP @ 1.65121
SL @ 1.63917

Trade Setup Overview

• Instrument: EUR/AUD (H4 timeframe)

• Trade Type: Buy Stop

• Entry Level: 1.64740

• Stop Loss (SL): 1.63917

• Take Profit (TP): 1.65121

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Technical Analysis

• Key Levels:

  • Support Level: The price has shown strong support near the 1.63900 level, as evidenced by previous price rejections. The stop loss is placed slightly below this level at 1.63917 to account for potential false breakouts.

  • Resistance Level: The 1.64700 level is a significant resistance zone, and the buy stop order at 1.64740 ensures entry only if the price breaks above this level, confirming bullish momentum.

  • Take Profit Level: The TP is set at 1.65121, slightly below the next resistance level, ensuring a realistic and achievable target.

• Trend Analysis:

  • The price is attempting to recover after a downtrend, and the recent bullish candlestick indicates a potential reversal. The trade aligns with the possibility of a short-term bullish correction.

  • The 50-period moving average (green line) is acting as dynamic resistance. A breakout above the buy stop level would confirm a bullish continuation.

• Price Action:

  • The price is consolidating near the 1.64700 level, forming a potential bullish continuation pattern. The buy stop order ensures entry only if the price breaks above this consolidation zone, confirming the continuation of the uptrend.

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Momentum Confirmation

• The momentum indicator shows a value of -0.00037825, indicating that bearish pressure is weakening. This aligns with the potential for a bullish breakout.

• The chart notes confirm that momentum supports the trade, awaiting candlestick confirmation for execution.

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Risk-Reward Ratio

• Stop Loss (SL): Placed at 1.63917, below the recent support level and the 1.63900 round number. This ensures protection against false breakouts while allowing the trade room to breathe.

• Take Profit (TP): Set at 1.65121, slightly below the next resistance level. This level aligns with the next logical resistance zone, providing a realistic target.

• Risk-Reward Ratio:

  • Risk: 0.00823 (1.64740 - 1.63917)

  • Reward: 0.00381 (1.65121 - 1.64740)

  • Risk-Reward Ratio: ~1:0.46. While the risk-reward ratio is less than 1:1, the high probability of success based on technical and momentum analysis justifies the trade.

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Candlestick Confirmation

• The trade setup is waiting for a bullish candlestick breakout above the 1.64740 level. This ensures that the trade is executed only when there is clear evidence of buying pressure.

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Psychological and Round Numbers

• The levels chosen (1.63900, 1.64700, and 1.65100) are psychological round numbers, which often act as key support and resistance zones in forex trading. These levels are likely to attract significant market activity, increasing the probability of the trade's success.

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Conclusion

This trade is justified based on the confluence of technical analysis, momentum confirmation, and logical risk-reward management. The buy stop order ensures entry only if the price breaks above the consolidation zone, confirming bullish momentum. The SL and TP levels are well-placed to protect against losses and capture potential gains, making this a high-probability trade setup.

Recommended Lot Size

Trading is all about statistics.

While we can experience winning streaks, we can also suffer from losing streaks.

As such, we should always size each trade to withstand losing streaks (if any).

It's widely recommended that you should not risk more than 2% of your capital for each trade.

We believe it's easier to control your lot size by limiting your lot sizing to 0.01 for every $500 in your account.

So if you have $5000, then risk no more than 0.10 lot size per trade.

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If you spot a mistake especially when it comes to the price, please use common sense and check the chart.

We wish you good luck and good profit for this trade idea.

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