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Today’s Trading Edge: EUR/USD- Decline Stalls at Bullish Gartley Pattern and as we await Draghi

Posted by Edward Moya on Aug 22, 2014 2:09:00 PM

WWM EURUSD AUG 22 2014

The euro-dollar made fresh lows this morning when it slid through the key 1.3250 level and is currently finding tentative support with the bullish Gartley pattern at around the 1.3226 area.  The weekly chart above shows that the X to A move has point D resting at the 61.8% Fibonacci retracement level.  The B to C move's 261.8% Fibonacci expansion level lies at 1.3207 and was not touched, but the symmetry between the A to B distance lines up with the C to D leg.  The harmonic five figure total has tentatively given the pair some support. 

The trend is still very much bearish, but profit-taking could allow to see a move trigger a move towards 1.3400.  With Draghi on the docket, we will look to fade any rally that may occur.   The market viewed Yellen’s message as uneventful as she stuck to the standard script that the Fed will act based on the economic data.  The optimism for rate hikes will grow as the economy in the U.S. improves.   Forecasts are growing that a hike will happen next year.   

Safe-haven trade flows may also support this trade.  Tensions with Russian/Ukraine forces may also provide a significant move over the weekend. 

The trade: Sell EURUSD at 1.3395 with a stop loss at 1.3445 and a take profit at 1.3095.  The Risk/Reward Ratio is 1:6

Edward J. Moya              

Technical Strategist

WorldWideMarkets Online Trading

Topics: EURUSD, yellen

 

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