EURAUD has seen a strong rally over the past week and this has taken prices above the 50-day moving average and towards the 200-day moving average. The near-term bias is bullish with RSI sharply above 50 and the MACD histogram turning positive. However, with RSI fast approaching overbought territory, there may be limited scope for further strong gains.
In the medium term, EURAUD remains within its 8-month range and the neutral outlook is supported by prices moving into the Ichimoku cloud. But the recent bearish cross of 50-day moving average with the 200-day moving average points to a slight underlying bearish trend.
Prices are currently capped by the 200-day moving average around 1.5265. A break above the 200-day moving average would strengthen the current upside momentum and drive prices above the Ichimoku cloud. However, the top of the cloud is likely to prove the next key resistance at 1.5355.
To the downside, the 50-day moving average, which is also where the tenkan-sen and kijun-sen lines converge is the key support level to watch out for at around 1.4850.
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