EUR/AUD 4H Chart 8:20PM EDT 8/14/2012
The EUR/AUD is coming off a record low at 1.1605 and has been in a sideways market during August as shown in the 4H chart. Note that the RSI reading in the 4H chart is at 60. A break above suggests loss of the bearish momentum that has held the market since this current bear run that started at the end of May. In a sense the “bearish-momentum-resistance” is being tested. Price is also about to test the August consolidation resistance at 1.1770.
If the current bearish trend continues, this may be a good place for resistance, at least to push price back to the middle of recent action, at about 1.1690. This can be said to be the central pivot of the range. This scenario goes with the trend that has been bearish.
A break above 1.1770 however opens up further corrective rally, exposing the previous consolidation resistance pivot at 1.1857. Note that the break above 1.1770 also completes a double bottom and if a throwback respects this as a bottom there could be further corrective bull run ahead.
A more aggressive bullish outlook using the double bottom as a guide targets 1.1945, which is also 23.6% retracement of the 1.3029-1.1605 bear run. A rally up to the declining trendline is still within the bearish mode, so there is technically upside risk toward 1.2150 (also 38.2% retracement), within the bearish scenario in the longer medium term, looking at rest of Q3 into Q4 of 2012.
EUR/AUD Daily Chart 8:30PM EDT 8/14/2012
Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist for FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
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