EURAUD could be in for a reversal from its selloff, as price formed a double bottom pattern on the 4-hour time frame and broke above the neckline. Price is trading past the resistance at 1.5100 and could be in for more gains.
However, the 100 SMA is below the 200 SMA so the path of least resistance might still be to the downside. If so, EURAUD could pull back to the broken neckline or drop all the way down to the bottoms at 1.4450-1.4500.
Stochastic has been indicating overbought conditions for quite some time, indicating that buyers are exhausted and that selling pressure is building up. Bears could take control once the oscillator falls from the 80.0 area. Similarly RSI is in the overbought region and is starting to turn lower.
Earlier in the week, the RBA decided to cut interest rates by 0.25% citing weak inflationary pressures are their main reason for easing. They added that global uncertainties remain and that the domestic economy is still in the middle of rebalancing.
Data from China, Australia’s main trade partner, came in mostly weaker than expected. The official manufacturing PMI dipped from 50.2 to 50.1 while the Caixin version slipped from 49.7 to 49.4. The non-manufacturing PMI fell from 53.8 to 53.5.
As for the euro, the lack of top-tier data has given the shared currency to advance on relatively upbeat medium-tier readings. Final PMI figures came in mostly in line with expectations while services PMI readings are due today. Also lined up is the Spanish unemployment change figure.
To contact the reporter of the story: Samuel Rae at email@example.com
For free forex trade signals, sign up on Trade24 here