The EURAUD may be resuming its strong downtrend. There are 5 clear waves to the downside and 3 overlapping waves moving up. Those familiar with Elliott Wave Theory understand that the 3 wave up move is likely to be a partial upward retracement. The 3 wave counter trend moves are excellent waves to consider a Fibonacci retracement strategy. Most retracements to a 5 wave move are 61.8 to 78.6% and this one fits the mold. We look for the trend to re-emerge to the downside on this 60 minute chart.

An aggressive stop would be placed just above the swing high near 1.3810. A more conservative stop would be just above the January 23 high near 1.3835. Look to take profit at least twice the distance to your stop or in the upper 1.3500's to lower 1.3600's.

For more information on Fibonacci retracements, watch a live webinar on Trading with Fibonacci or watch a recording of these live webinars in the DailyFX Plus Trading Course (scroll down to the bottom for the archives).

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