EUR/AUD’s decline from 1.6139 extended lower to 1.5774 last week. As long as 1.5962 resistance holds, deeper fall is expected through 1.5773. Nonetheless, price actions from 1.6189 are viewed as a consolidation pattern. Therefore, downside should be contained above 1.5621 support to bring rebound. On the upside, above 1.5962 will turn bias to the upside for 1.6139 resistance and above.
In the bigger picture, while there is bearish divergence condition in daily MACD, there is no clear sign of reversal yet. Current rally from 1.3624 could extend to 1.6587 key resistance (2015 high). Nonetheless, we’d expect further loss of upside momentum, and strong resistance from 1.6587 to limit upside and bring reversal. On the downside, sustained break of 1.5621 support should confirm reversal and turn outlook bearish for 1.5153 support and below.
In the longer term picture, the rise from 1.1602 long term bottom (2012 low) 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 indicate long term reversal and target 1.1602 long term bottom again.
