EUR/AUD Tests Channel Support with Potential Double Bottom

EUR/AUD Tests Channel Support with Potential Double Bottom

Bearish Channel: The EUR/AUD has been trading in a slightly declining channel throughout February. As we wind down the month, the pair is trading at the channel’s support. Let’s take a look at the charts to assess the technical outlook.

EUR/AUD 4H Chart 2/27
euraud 4h chart 2/27
(click to enlarge)

Weak, Choppy Bearish Trend in Neutral Market: The 4H chart shows that price action in the EUR/AUD pair has been choppy but bearish, falling from a high at the beginning of the month at 1.4895 down to 1.4315 this week. Price just crossed under the 200-, 100-, and 50-period SMAs this week. These moving averages are moving sideways. The whole price-SMA dynamic suggests that the bearish trend is still weak and that the overall direction is neutral.

Double Bottom Attempt: As we get into the 2/27 US session price action is respect the 1.4315 low again. This is also near a projected channel support. The RSI is showing a bullish divergence as well. Let’s see if price can move above 1.44 to complete a double bottom.

Key Levels: A double bottom would open up the 1.45 support/resistance pivot, with upside risk towards the 1.46 handle. In the daily chart, we can see that 1.46 is also a common support/reistance pivot. Also, the daily chart shows a slight bearish bias due to the RSI and the fact price is under the cluster of SMAs. A break above 1.46 would take away this bearish bias, and would expose the 1.48 and 1.49 highs.

EUR/AUD Daily Chart 2/27
euraud daily chart 2/27
(click to enlarge)

Bearish Continuation Scenario: Otherwise, staying course with the February decline, if price does not push above 1.44 to form a double bottom, or does break above but fails to close above, then there is still further downside at least to the 1.42 common support, before exposing the 1.40 low, 2015-low, and the 1.38, 2014-low.

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Fan Yang has been a professional forex trader and analyst since 2007. He specializes in technical analysis and has a Chartered Market Technician designation since 2011. He was the chief technical strategist at CMSFX He was also the founder and chief currency strategist at FXTimes Over the years, Fan has not only been a trader and analyst but also an educator. As a proponent of both technical and fundamental analysis in trading, Fan advocates simplicity and discipline as key factors in making trading decisions when faced with so many "clues" and "signals". Currently Fan Yang is the chief currency analyst and webinar instructor at