- EUR/AUD is probably reversing its trend and starting a new downtrend.
- After it peaked on October 31 it formed a bearish candlestick reversal pattern which is currently playing out.
EUR/AUD has started to fall after forming a bearish Shooting Star Japanese candlestick reversal pattern (red-shaded rectangle on chart below) as it peaked on October 31.
EUR/AUD Daily Chart
In addition, a bearish down-day followed the day of the Shooting Star and added confirmation.
Since then, EUR/AUD has continued selling off and there is evidence it is now in a short-term downtrend. Given the principle that “the trend is your friend” the odds favor a continuation lower.
The next target is at 1.6400 and the 200-day Simple Moving Average (SMA), followed by the cluster of major SMAs underneath at around the 1.6350s.
The pair may have completed an “abc” three-wave Measured Move pattern at the October 31 highs, further adding to the evidence a down cycle is likely taking over.
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