EURAUD completed a bullish double bottom formation in the four-hour chart and spiked to a three-week high of 1.5946 on Thursday after closing comfortably above the 1.5770 neckline.
The area around the 200-period simple moving average (SMA), which has seen many struggles in December, is currently in target. A descending trendline stretched from 1.6409 and the 38.2% Fibonacci retracement of the downfall from 1.6418 to 1.5592 are in the same neighborhood, making the region more challenging as the RSI and the Stochastics are still strengthening within the overbought zone.
Should the bulls continue to hold the reins above 1.5900, resistance may run up to the 50% Fibonacci of 1.6000, where any significant violation is expected to stage another upside extension towards the 61.8% level of 1.6100.
Otherwise, if the price retreats below the 200-period SMA, the 1.5850 barrier may attempt to catch the fall, preventing any move towards the key border of 1.5770. In the event the latter proves easy to pierce, the next stop could be around 1.5688 unless the 20- and 50-day SMAs come to the rescue.
In brief, EURAUD is aiming for another bullish extension, though a sustainable move above 1.5900 is required for the buyers to drive towards 1.6000 level.
