EUR/AUD Price Forecast: Possibility that new up leg is unfolding within range
- EUR/AUD could be forming a new up leg after bottoming at the start of the month.
- It has formed various reversal patterns and signals that point to a likely extension higher.
EUR/AUD bottomed out at 1.6000 and started rising last week, recovering back up to the 1.6300s before pulling back to where it is currently consolidating in the 1.62s.
EUR/AUD Daily Chart
It is possible this is the start of a new leg higher within a long-term range that stretches from a floor at about 1.6000 and a sloping ceiling currently in the 1.65s. If so, then prices will probably continue higher.
A break above Tuesday’s high of 1.6354 would likely indicate a continuation to the red 50-day Simple Moving Average (SMA) at 1.6433. A break above that, would probably lead to a move up to the top of the range at around 1.6550.
The blue Moving Average Convergence Divergence (MACD) momentum indicator has crossed above its red signal line, giving a buy signal and adding to the bullish evidence.
EUR/AUD formed a bullish Three White Soldiers Japanese candlestick pattern after the October 3 bottom (green shaded rectangle on chart), indicating a possible reversal of the short-term trend. This occurs after a downtrend when three up days form consecutively.
Although the pair formed a bearish Shooting Star candlestick on Tuesday after the market peaked and then fell back down to near its open, the day ended green and not red lessening its bearish significance. It was also not followed by a down day immediately after which would have given added bearish confirmation (red-shaded rectangle on chart).
Author
Joaquin Monfort
FXStreet
Joaquin Monfort is a financial writer and analyst with over 10 years experience writing about financial markets and alt data. He holds a degree in Anthropology from London University and a Diploma in Technical analysis.
