EUR/AUD dropped to 1.6006 last week but failed to sustain below 1.6033 low and recovered. Initial bias remains neutral this week first, and further fall is in favor with 1.6178 minor resistance intact. On the downside, break of 1.6006 and sustained trading below 1.6033 will confirm resumption of down trend from 1.9799. Next target is 100% projection of 1.6872 to 1.6122 from 1.6420 at 1.5715. On the upside, firm break of 1.6178 minor resistance will suggest short term bottoming, after drawing support from 1.6033 low. Intraday bias will be turned back to the upside for 1.6420 resistance.
In the bigger picture, price action from 1.9799 are seen as developing into a corrective pattern. The question is whether it’s a sideway pattern or a deep correction. On the downside, sustained break of 1.6033 will suggest it’s the latter case and target 61.8% retracement of 1.1602 (2012 low) to 1.9799 at 1.4733. On the upside, break of 1.6827 resistance will favor the former case and bring stronger rebound.
In the longer term picture rise from 1.1602 (2012 low) could have already completed with three waves up to 1.9799. The development suggests that long term range trading is extending with another medium term down leg. Sustained trading below 55 month EMA (now at 1.5847) will further affirm this case and target 1.1602/3624 support zone.
