EUR/AUD edged higher to 1.4183 last week but quickly pulled back. Downside of retreat was contained by 1.3874 minor support so far and outlook is unchanged. We’d still slightly favoring the case of trend reversal after defending key support level at 1.3671, on bullish convergence condition in daily MACD.
Initial bias stays neutral this week first. On the upside, above 1.4183 will turn bias to the upside for 1.4289 resistance next. Break will affirm our view and target next key resistance level at 1.4721. However, break of 1.3874 minor support will invalidate our view and turn bias back to the downside for retesting 1.3624 low.
In the bigger picture, price actions from 1.6587 medium term top are viewed as a corrective pattern. We’d expect strong support from 1.3671 key level to contain downside and bring rebound. Up trend from 1.1602 should not be finished and will resume later. Break of 1.4721 resistance will indicate completion of such correction and turn outlook bullish for retesting 1.6587 high. However, sustained break of 1.3671 will invalidate our bullish view and would turn focus back to 1.1602 long term bottom.
In the longer term picture, the rise from 1.1602 long term bottom isn’t over yet. We’ll keep monitoring the development but there is prospect of extending the rise to 61.8% retracement of 2.1127 to 1.1602 at 1.7488 and above. However, sustrained trading below 1.3671 should confirm trend reversal and target 1.1602 long term bottom again.
