The EUR/AUD was consolidating last week with a slightly bullish tilt. The 1H chart shows the choppy price action reaching 1.4197 before EUR/AUD started to retreat.
By the end of the week, price fell below the week’s rising trendline, signaling a bearish outlook. Price fell below the 200-, 100-, and 50-hour simple moving averages (SMAs) and the 1H RSI tagged below 70.
At the start of this week, EUR/AUD found support at 1.3943 and pulled back above the 50 and 100-hour SMAs. The 1H RSI also broke above 60. These are signs that the bearish breakout is having trouble extending. However, as long as price holds below 1.41, the bearish outlook should still be in play. Above 1.41, price would also break above the 200-hour SMA which would put EUR/AUD back into a sideways market.
As the market struggles to come up with a direction in the 1H chart, the direction does not look much clearer in the 4H chart. There was a rally at the turn of the month from 1.3673 up to 1.4355. Then, we started to see a choppy retreat. Based on the structure of the rally vs. the structure of the decline so far, we can say that the bias is bullish.
This bullish bias would be even more clear if price does indeed push above 1.41, because it would show a failure of the latest downswings to make a new low (vs. the 1.3908 April-low). Clearly, price would have missed the falling channel support. Such failure would suggest that bulls are in charge. Then, if price attacks the channel resistance, we should expect a bullish breakout, with pressure back towards the 1.4355 high.
Previous Post by Author: EUR/JPY Respects Key Support; GBP/JPY Signals Bullish Continuation