EUR/AUD traded lower yesterday after it hit resistance at 1.5935, and it's currently hovering slightly above the critical support zone of 1.5835. Since Feb. 4, the outlook has been negative, and although the pair failed several times to overcome the 1.5835 zone, it kept forming lower highs. However, we would like to see an apparent dip below that barrier to start examining further declines.
Such a dip will confirm a forthcoming lower low and may initially test the 1.5780 territory, marked by the low of Feb. 1. If that level is also broken, we could see the bears diving towards the low of Jan. 26, at 1.5715, or the low of Jan. 13, at 1.5690. If they are not willing to stop there either, then a break lower could set the stage for declines towards the 1.5565 zone, marked by the lows of Dec. 30 and 31.
Looking at our short-term oscillators, we see that the RSI is below 50, but it has ticked up. The MACD, although below both its zero and trigger lines, points sideways. Both indicators detect downside speed, but the RSI ticked up, and that the MACD points sideways adds to our choice of waiting for a dip below 1.5835 before we get confident on more declines.
To abandon the bearish case, we would like to see a strong recovery above the round figure of 1.6000. This could wake up more bulls, who could climb towards the 1.6135 barrier marked by an intraday swing high formed on Feb. 7. Another break, above 1.6135, could extend the advance towards the 1.6234 barrier, which is slightly above the peak of Feb. 4 and is marked by the peak of Sept. 21.