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31 Mar 2014
EUR/AUD: Bearish outlook post H&S confirmation
FXStreet (Bali) - EUR/AUD trades around the 1.4875 area after a sharp sell-off in the last 2 weeks, which took the rate from levels near 1.55 to a multi-month low of 1.4779, not seen since Dec 4 2013.
The sell-off seen in the last few weeks came as a result of broad-based AUD strength, which combined with weakness in EUR/USD, saw the pair readjusted significantly lower. While the pair has been in a solid multi-month uptrend, as an expression of the diverging monetary policies seen by the RBA/ECB in the last year, continuous deflationary pressures in the EZ, coupled with a neutral stance by the RBA - not talking down the currency adds to the AUD bullish case -, has allowed EUR/AUD sellers to take firm control of the market.
On the daily chart, the head and should pattern was confirmed on March 26, after a breakout of the neckline at 1.50. Projected targets to the downside are found at 1.45 or thereabouts (distance from neckline to shoulder) and around 1.42 (distance from neckline to head). While the multi-month uptrend is still not negated, the last technical breakouts suggests that a period of AUD strength vs EUR is likely to continue.
The sell-off seen in the last few weeks came as a result of broad-based AUD strength, which combined with weakness in EUR/USD, saw the pair readjusted significantly lower. While the pair has been in a solid multi-month uptrend, as an expression of the diverging monetary policies seen by the RBA/ECB in the last year, continuous deflationary pressures in the EZ, coupled with a neutral stance by the RBA - not talking down the currency adds to the AUD bullish case -, has allowed EUR/AUD sellers to take firm control of the market.
On the daily chart, the head and should pattern was confirmed on March 26, after a breakout of the neckline at 1.50. Projected targets to the downside are found at 1.45 or thereabouts (distance from neckline to shoulder) and around 1.42 (distance from neckline to head). While the multi-month uptrend is still not negated, the last technical breakouts suggests that a period of AUD strength vs EUR is likely to continue.