EUR/AUD’s fall from 1.5770 extended to as low as 1.5321 last week and initial bias stays mildly on the downside this week. Nonetheless, such decline is seen as a correction. Hence, we’d expect strong support from 1.5226 to contain downside to bring up trend resumption. On the upside, above 1.5482 will bring retest of 1.5770 first. However, sustained break of 1.5226 will carry larger bearish implications and turn outlook bearish.
In the bigger picture, we’re holding on to the view that corrective decline from 1.6587 medium term top (2015 high) has completed at 1.3624. Rise from 1.3624 is expected to extend to retest 1.6587. We’ll hold on to this bullish view as long as 1.5226 resistance turned support holds. Firm break of 1.6587 will resume long term rise from 1.1602 (2012 low). However, sustained break of 1.5226 will indicate trend reversal and target 1.3624 again.
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, sustained trading below 1.3671 should confirm trend reversal and target 1.1602 long term bottom again.
