Published: October 2nd, 2020
EUR/AUD long-term perspective still remains bullish as the price is producing higher highs and higher lows. Besides, the pair remains above the 200 Exponential Moving average and recently rejected the uptrend trendline. The nearest and perhaps the key resistance area is located near 1.6668, which previously acted as the resistance a few times.
The most recent price action shows, that EUR/AUD broke and closed above the 50 Simple Moving Average after the rejection of the uptrend trendline. This could result in a strong upside move as soon as next week, with a potential rise of nearly 300 pips.
On the daily chart, it is clear that the key support area has been formed near 1.6048, which has been rejected multiple times during the period of 12 months. Obviously, bulls continue to defend this support suggesting the validity of the long term upturned.
At the same time, EUR/AUD rejected the simple uptrend trendline along with the 161.8% Fibonacci retracement level while producing a double bottom at 1.6133. Today there is yet another rejection of the support. This time, the support is confirmed by 127.2% Fibs at 1.6360 along with the 50 Simple Moving Average which was rejected just a few days ago. Therefore, as long as the daily closing price remains above the recently established low at 1.6316, the EUR/AUD trend will remain bullish. On this chart, the resistance is confirmed by a 78.6% Fibonacci retracement level at 1.6669, which corresponds to the previously discussed supply area.
EUR/AUD broke above the triangle pattern formed throughout the past 4 months. This is a strong indication that the uptrend is highly likely to continue at some point in time. Maybe this time has already arrived as the price has reached and rejected a 50% Fibonacci retracement level along with the 50 Simple Moving Average.
The downtrend trendline was penetrated back on September 22. This has resulted also in the break above the previously formed resistance as well as the simple downtrend trendline. Right now, EUR/AUD is re-testing and rejecting the previous supply zone, which now is acting as the resistance. This price area also corresponds to the breakout point of the trendline and the 200 SMA. And finally, it can be seen that there was a very clean bounce off the 50% Fibs, where price attempted to break below, but failed to close lower. It shows that bulls are in control and could start sending prices higher early next week.
And the most important part is that 127.2% Fibs applied to the current correction down, corresponds exactly to the previously mentioned upside target at 1.6669.
Today EUR/AUD is rejecting the average price downtrend trendline along with the 200 Simple Moving Average. If today’s daily close will remain above the recently produced low at 1.6346, the trend will remain quite bullish. But if there will be a close below, the price might move down to re-test the 1.6314 support. This support is confirmed by 261.8% Fibonacci retracement level and has been rejected cleanly previously.
The EUR/AUD is long term bullish while the current downside correction could be inviting more buyers. This is because of the confirmed breakout of the triangle pattern and multiple rejections of the support indicators. All-in-all, there are around 300 pips upside potential in the coming week or two.
As per the 4-hour chart, the main and key resistance is located at 1.6666 level, which corresponds to two Fibonacci retracement levels as per the 4-hour chart.
As per the 1-hour chart, an hourly break and close below the recent support at 1.6346 could provide more selling pressure on EUR/AUD. But only a daily break and close below 1.6314 will completely invalidate the bullish forecast, which might result in EUR/AUD testing 1.6213 support as per the 1-hour chart.
Support: 1.6314, 1.6213
Resistance: 1.6450, 1.6666