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EUR/AUD Near Opportunity to Go Long

Last updated 3/27/2009 6:37 PM EST (GMT -5) 0 Comments - Add your comment

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Bradley W. Gareiss

Technical Analyst, GFT

Today we will look at the EUR/AUD, which is not a pair we typically feature.  However, the pair is forming a nice bullish butterfly that is near completion.  This is an ideal context for our pattern to form within because it would also create a double bottom as seen on the 8hr Chart.

We are looking to buy the EUR/AUD if it drops down to 1.9087 (Point D).  Point D is located at the convergence of the following points: 

This pattern does not have a lot of 'bonus' levels of convergence, but the pattern itself has developed very nicely.  The CD leg has moved down in roughly the same amount of time as AB.  The only extra convergence we see if the possibility of a double bottom on the 8hr Chart.  We will watch for gaps when the markets open after the weekend though.  If the market gaps down close to the entry, we will cancel the trade.  A large gap down would indicate that the pair has downward momentum.  Ideally, we will see the pattern gradually drop down to the entry.  Also, if the pattern comes within 20 pips of entering, does not enter, and hits T1 before entering, we will cancel the trade.

To recap, we will look to buy the EUR/AUD at 1.9087 with our stop placed at 1.9013.  Our initial profit targets are 1.9207 (38.2% of CD) and 1.9297 (61.8% of CD).

8hr Chart - Potential double bottom.	1hr Chart - Bullish Butterfly; buy @ 1.9087.

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