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Today’s Trading Edge: EUR/AUD bearish reversal may accelerate on Greek Election worries

Posted by Edward Moya on Dec 29, 2014 3:05:00 PM

WWM EURAUD DEC 29 2014

The EUR/AUD daily chart shown above displays a bearish ABCD pattern that formed on December 17th.  The current bearish reversal accelerated its slide today after the Greek government failed to secure enough votes to elect its presidential candidate.  Greece will now have snap elections on January 25th and this may create uncertainty regarding future Greek bailouts if the anti-austerity party wins. 

It almost seems inconceivable to see a daily chart involving the euro that is not making fresh record lows.  While both the euro and Aussi-dollar have been two of the weaker performing currencies against the other majors in 2014, against each other they have been relatively range bound since summer of 2013.  With the current slide appearing poised to break below the 38.2% Fibonacci retracement of the C to D leg, price may seek support from the 50.0% Fibonacci level which is 1.4783. 

Deeper support may come from a confluence of the 200-, 100-, and 50-day simple moving averages (SMAS) which are currently residing between 1.4474 and 1.4633.   

The trade: Sell EUR/AUD at 1.4950 with a stop loss at 1.5000 and a take profit at 1.4800.  The Risk/Reward Ratio is 1:3

Edward J. Moya

Technical Strategist

WorldWideMarkets Online Trading

 

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