We have seen multiple butterfly patterns appearing recently and this seems to be continuing with EURAUD. After the recent spike on Monday opening after the French first round of elections, we have seen the price touch the 1.4438 level to hit point D on the pattern. This has now complete all 5 points and has confirmed that the pattern is valid.
A short position should be entered around the 1.4438 level with a stop loss placed just above point D allowing for some variability due to the increased volatility in the market. Any move higher than this will invalidate the pattern and the trade should be closed.
Chart theory suggests that if the XABC points have all been met and the price moves towards the last level D and reaches that point, the pattern would indicate a reversal at this level and a possible retracement of 38.2 - 61.8% of the CD distance. In the example, the take profit is located around the major round number of 1.4.
A short position should be entered around the 1.4438 level with a stop loss placed just above point D allowing for some variability due to the increased volatility in the market. Any move higher than this will invalidate the pattern and the trade should be closed.
Chart theory suggests that if the XABC points have all been met and the price moves towards the last level D and reaches that point, the pattern would indicate a reversal at this level and a possible retracement of 38.2 - 61.8% of the CD distance. In the example, the take profit is located around the major round number of 1.4.