EURAUD Ascending Channel Breakout Failed to Hold Sellers’ Momentum

EURAUD Ascending Channel Breakout Failed to Hold Sellers’ Momentum

 Published: June 7th, 2022

In the latest RBA meeting, the central bank raised the interest by 50 bps to 0.85%, beyond the expectation of 0.60%. As a result, the EURAUD price shot lower but failed to hold the momentum from the less supportive RBA rate statement. The RBA governor showed an optimistic outlook regarding employment and economic growth. However, the market sentiment changed as soon as he said it might take a year to see the inflation at the targeted 2-3% range. As a result, the EURAUD H1 candle formed exhaustion while the daily price is trading within a strong demand zone.

In this context, investors should monitor how the Eurozone economic releases are coming where the ECB will meet this week with no possible change in the interest rate. However, any hawkish sentiment regarding the Eurozone economy would be a bullish factor for the EURAUD price. Let’s have a look at the complete future price direction from the EURAUD technical analysis.

EURAUD Daily Chart

EURAUD Daily Technical Analysis 7th June 2022

In the daily chart, the EURAUD price remained within a bearish trend where the recent ascending channel breakout increased the possibility of further downside pressure. Moreover, the price remained corrective below the dynamic 20 EMA, increasing the bearish momentum. Based on the MACD indicator, the market sentiment is also bearish as the MACD Histograms are below the neutral line while the MACD line is moving down with a selling momentum.

Although the bearish pressure is potent from technical indicators, the price entered a critical demand zone from 1.4800 to 1.4606 area. Moreover, the demand zone awaits testing the unmitigated price action at the 1.5800- 1.5400 zone. Therefore, based on the supply-demand concept, investors may find a bullish opportunity from the current daily order block that needs to be filtered from the intraday price action analysis.

Overall, the current trading idea is to find a bullish opportunity in this pair as sellers became weaker below the channel support. In that case, a bullish daily candle from the demand zone would be a buying opportunity where the main aim is to test the 1.5322 resistance level. On the other hand, the break below the 1.4600 level with a bearish daily close would validate the channel breakout where the main aim would be to test the 1.4200 level.

EURAUD H4 Chart

EURAUD H4 Technical Analysis 7th June 2022

According to the Ichimoku Cloud analysis, the current EURAUD chart is still bearish where the Senkou Span A moves sideways below the Senkou Span B in the future cloud. On the other hand, the price traded below the Kumo Cloud for a considerable time but became volatile at the 1.4773 support area. Moreover, the RBA rate hike made exhaustion below the 1.4773 swing low that grabbed the sell-side liquidity before aiming higher.

In the above image, the current MACD Histogram shows a corrective bullish pressure while the MACD line pushes up and remains below the neutral line. On the other hand, dynamic Tenkan Sen and Kijun Sen are closer to the price and form a bullish crossover. The extreme volatility in the near-term price action with an H4 candle above the dynamic Kijun Sen would eliminate the selling pressure below the Cloud resistance.

Based on the H4 context, investors should wait for a bullish H4 candle above the dynamic Kijun Sen that may increase the bullish possibility towards the 1.5010 resistance level. On the other hand, a fresh new low below the 1.4770 level would eliminate the current trend towards the 1.4600 area.

EURAUD H1 Chart

EURAUD H1 Technical Analysis 7th June 2022

According to the EURAUD intraday chart, the price trades within a corrective momentum where the most recent price action is very volatile above the 1.4773 support level. According to the volume profile, the price trades closer to the highest trading volume based on the visible range. Moreover, the most recent intraday high volume level is also closer to the price, indicating a strong investors’ activity. Therefore, any breakout from the volume area would be a trading opportunity in this pair that may extend more in the coming hours.

The above image shows how the price trades at the dynamic 20 EMA and weekly VWAP area, where the strong exhaustion from the new-driven sentiment is present. In that case, a bullish break of structure with an H1 close above the 1.4900 level would open a bullish opportunity in this pair towards the target of the 1.5010 level.

Should You Try Buying EURAUD?

As per the current market context, EURAUD bullish opportunity awaits intense buying pressure from the current demand zone with a daily candle. In that case, the primary idea is to test the 1.5010 resistance level in the coming days.

Show Results