EUR/AUD looks ready to tap out
From a purely technical perspective, EUR/AUD could look appealing to bears. Resistance was found at 1.68 before bearish range expansion and a potential bear flag followed. But I also feel like we have seen this movie before (even if it was upside down).
In late November we saw a false break of the June and October lows before a bull-flag breakout occurred. we then saw another leg higher, bullish breakout and retest of the 200-SMA before its final leg higher.
If the reverse is to play out, we could now be in for a bull-flag breakdown towards the 200-day SMA, bearish consolidation, then breakdown and retest of the 200-day SMA before its final leg lower.
From a fundamental perspective, I believe markets have priced RBA cuts in too aggressively and the USD could be in for a pullback. And if Trump's policies really are less inflationary as feared, it could trigger a risk-on rally which could benefit an arguably oversold AUD over the euro.
And that is why I am now hunting EUR/AUD shorts.
MS
In late November we saw a false break of the June and October lows before a bull-flag breakout occurred. we then saw another leg higher, bullish breakout and retest of the 200-SMA before its final leg higher.
If the reverse is to play out, we could now be in for a bull-flag breakdown towards the 200-day SMA, bearish consolidation, then breakdown and retest of the 200-day SMA before its final leg lower.
From a fundamental perspective, I believe markets have priced RBA cuts in too aggressively and the USD could be in for a pullback. And if Trump's policies really are less inflationary as feared, it could trigger a risk-on rally which could benefit an arguably oversold AUD over the euro.
And that is why I am now hunting EUR/AUD shorts.
MS
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