A month ago, everyone mocked the inverse head and shoulders pattern in AUD/USD. A few months before that, the regular head and shoulders pattern on the AUD/USD signaled the rout down to 0.8700.
This time the head and shoulders pattern is in EUR/AUD.
EUR/AUD daily
The Australian dollar side of this trade is what makes me nervous. It’s run a bit too far, too fast — especially against the yen. But with the leaks about ECB QE today and Draghi’s talk about more action yesterday, there’s a case for euro shorts on a few fronts.
Also, credit where it’s due: UBS is on the verge of a great trade in AUD/USD.
