EUR/AUD traded higher today, after it hit support near the psychological zone of 1.7000 yesterday. Since April 9th, the pair has been trading in a trendless mode, between that hurdle and the 1.7350 zone, also forming a possible “double bottom” formation. That said, given that the formation is not completed yet, we will stay sidelined for now.
The completion of the pattern may be signaled by a break above the 1.7350 barrier. Such a move would also confirm a forthcoming higher high and may initially aim for the inside swing low of April 7th. If that level fails to withhold the rate, then we may see a test at 1.7550, slightly below the peak of the following day and marked by the inside swing lows of March 31st and April 1st. Another break, above 1.7550, could carry larger bullish implications, perhaps setting the stage for advances towards the 1.8080 area, which provided decent resistance between March 31st and April 6th.
Shifting attention to our short-term oscillators, we see that the RSI rebounded and emerged above its 50 line, while the MACD lies above its trigger line and appears ready to obtain a positive sign soon. What’s more, there is positive divergence between both these indicators and the price action. These momentum signs increase the probability for some further near-term advances.
Alternatively, if the bears appear stronger than the bulls and manage to push the rate below 1.7000, this would confirm a forthcoming lower low and signal the resumption of the prevailing downtrend. We may then see declines towards the lows of March 4th and 5th, at 1.6775, the break of which may open the path towards the inside swing high of February 3rd, at around 1.6600. If that level does not hold either, then the next support to consider may be the inside swing peak of February 7th, at 1.6450.
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