Forex Video Briefing (11/3) – EUR/AUD Shifting
The daily EUR/AUD chart shows the pair in a bearish mode from the 2014-high of 1.5831 down to the 1.3788 low in September. Note that during this decline, price action showed lower highs and lower lows, price was below the moving averages, and the RSI was tagging 30 while holding below 60. These are signs of persistent bearish bias and momentum.
However, we saw these conditions breached in September as price broke above a falling trendline, the 100-, and 50-day SMAs, and pushed the RSI above 60, which showed loss of bearish momentum. It did not tag 70, so it didn’t show bullish momentum. Price was able to tag 1.47, which represents a higher high of significance for the first time in 2014.
Now, it is back at the crossroad. When we look at the 4H chart we can see that there is a bearish attempt since mid-October. Price has been basically in a falling channel, below the SMAs, and the RSI showed bearish momentum. However, if price extends above 1.4450, we would have a bullish continuation signal, especially if the 4H RSI pops up above 60. It would clear the falling channel, the moving averages, and start to make higher highs in this 4H chart. This scenario opens up the 1.47 high with upside risk toward the 1.4870 and the 1.50 handle.