EUR/AUD has been in a downside trajectory since Aug. 20, marked by a downside resistance line, while today, the rate broke below the upside support line drawn from the low of July 6. In our view, that break increases the chances for more declines in this exchange rate, but in order to get more confident on that front, we would like to see a clear dip below they round figure of 1.6000.
Such a dip below that psychological figure could invite more bears into the game, who, in their turn, may drive the action towards the low of Aug. 11, near 1.5903, or the low of July 16, at 1.5875. If they are not willing to stop there, then a break lower could see scope for extensions towards the low of July 14, at 1.5775.
Shifting attention to our short-term oscillators, we see that the RSI turned down again, near its 30 line, while the MACD continues to run below both its zero and trigger lines. Both indicators detect negative momentum and support the notion for further declines in this pair.
Now, the outlook could turn back to a positive one, if wee see a clear and strong rebound back above 1.6195. Such a move would confirm the rate’s return above both the aforementioned diagonal lines and would also confirm a forthcoming higher high on the 4-hour chart. The bulls may then get encouraged to push the action towards the peak of Aug. 27, at 1.6265, the break of which could extend the advance towards the 1.6335 area, marked by the inside swing low of Aug. 20. Another break, above that line could carry extensions towards the 1.6437 level, defined as a resistance by the high of Aug. 20.