Looking at the bigger picture, EUR/AUD continues to trade, not only below the short-term downwards moving resistance line, drawn from the peak of the 25th of April, but also below the long-term upwards moving trendline, taken from the lows of 22nd of February 2017. All this doesn’t look very promising for EUR/AUD in the longer-term. In the short-term, considering the recent strengthening of the Euro, we could see a bit of more recovery in EUR/AUD.
We will prioritise the short-term scenario and aim for a corrective move higher. A good break above the 1.5425 barrier could trigger some more buying from the market participants and we could see the pair hitting the next key level of resistance of 1.5500, or even the next one at 1.5530. A move above the last level could open the way for a test of the aforementioned downwards resistance line, a break of which could bring in even more bulls into the game.
The upside scenario is also supported by the RSI and the MACD, which are both showing signs of positive divergence. What’s more, the RSI is above its 50 line and the MACD has shifted from its lows and is now hitting its 0 mark.
On the downside, a move back below the 1.5395 zone could be seen as a sign of weakness coming back. If the pair continues dropping towards the 1.5315 mark, then the bulls might start abandoning EUR/AUD, which will allow the bears to take full control and drive the pair towards the Monday’s lows at 1.5270 area. A break below that could open the path towards the 1.5155 level.
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