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.
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.
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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