The EUR/AUD daily chart shown above displays the bullish bias that began Thanksgiving week after price was unable to break below the 1.4200 handle. After rallying above the 200-, 100-, and 50-day simple moving averages (SMAS) price continues to surge towards the nine month high around the 1.5075 resistance area that was established late in March.
Currently the chart is displaying a potential bearish Gartley pattern that could be forming around the 1.5075 – 1.5235 zone. The X to A retracement however is not having optimal symmetry with the B to C expansion levels. The lack of a harmonious agreement opens the door to scale in a short trade here.
The first short will occur with the 61.8% Fibonacci retracement of the X to A move at 1.5055. The second short will use the 200.0% Fibonacci expansion level of the B to C move at 1.5155. A break above 1.5500 will invalidate this pattern.
The trade: Sell EUR/AUD at 1.5055 and at 1.5155 (average price of 1.5105 with a stop loss at 1.5500 and a take profit at 1.4510 If filled on both entry prices, the Risk/Reward Ratio is 1:1.5
Edward J. Moya
WorldWideMarkets Online Trading