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Today’s Trading Edge: EUR/AUD– Chart Pattern Wars –Gartley VS H&S

Posted by Edward Moya on Mar 31, 2014 10:08:00 AM
WWM EURAUD MAR 31 2014

During the last week of trade, the EUR/AUD daily chart shown above has continued to trade within a moderate range between its 100-day and 200-day Simple Moving Averages (SMA).  The indecision of the next major move comes as a battle is spurring between two key technical patterns. 

On March 26th, price action appeared to break down below the neckline of what could be a head-and-shoulders pattern.  That move also coincided with the taking out of the psychological 1.50 handle.  If sellers emerge victorious over the next couple weeks, we may see a test of the 1.4426 area.  Eventually, a decline towards the 1.40 zone may be targeted.    

Last week’s bearish move on the pair appeared to have stalled on Friday as price tentatively created a bullish Gartley pattern.  The symmetry is not optimal, but the reaction thus far appears to have triggered at the very least a small reversal.  If bullish momentum persists key resistance will once again come from the 100-day SMA which currently resides at 1.5159. 

With Chinese stimulus potentially right around the corner, I choose to take the side of the Australian currency for the next couple weeks. 

The trade: Sell EUR/AUD at 1.5060 with a stop loss at 1.5180 and a take profit at 1.4700.  The Risk/Reward Ratio is 1:3 

Edward J. Moya

Technical Strategist

WorldWideMarkets Online Trading

 

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