Previous: EUR/AUD Bouncing off Projected Triangle Support (11/2)
EUR/AUD:
Both the Euro and Aussie have been weak against the USD and JPY in this risk-off environment we have in November. But the Aussie has been the weaker currency and the EUR/AUD has been in a bull run since Nov.1. As we near the end of the month, we are again getting some signals of topping. The 1H chart shows a market that has been persistent as it has maintained the RSI reading above 40 and has tagged 70. We are now testing 40 again, but so far it is holding.
There is also bearish divergence with the 1H RSI, and the market is has been trading at the upper band of the bollinger band (using 3 std deviations from 200SMA). The failure to do it in the current bullish attempt spells a slow down to the rally, and possible topping. There is also a double top attempt spotted, but it has not been confirmed as price action still struggles to break the base near 1.3735.
A break below opens up a possible correction decline toward 1.35, which is just above the 61.8% retracement of the latest 1.3285-1.3808 swing at 1.3485. The first near-term target is probably the 1.3656 pivot of the latest swing seen in the 1H chart. Then if the double top is respected upon subsequent pullback , we can consider the 1.3485-1.35 target.
A failure to respect the double top attempt opens up further upside. Looking at the daily chart and considering that it has been range-bound, the upside is limited to 1.39, where the market is likely to meet the projected triangle resistance. A more aggressive target could be near 1.3960-1.3970, near the closes of the last 2 peaks (instead of the highs reached by the candle wicks).
Fan Yang CMT is the Chief Technical Strategist FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
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