EUR/AUD has been in a sliding mode since yesterday, when the pair hit resistance near the 1.5755 barrier. However, the price structure continues to suggest higher peaks and higher troughs above the short-term uptrend line taken from the low of the 6th of June, and also above the prior downside resistance line drawn from the peak of the 25th of April. So, having all these in mind, we believe that the near-term outlook is somewhat positive, and we would treat the recent slide as a corrective move.
If the bulls are strong enough to take charge from near current levels, we would expect them to aim for another test near the 1.5755 barrier. That said, we would like to see a clear move above 1.5775, a resistance marked by the inside swing low of the 11th of May, before we get confident on more upside extensions. Such a break is possible to open the way towards our next resistance zone of 1.5885, defined by the peak of the 14th and 15th of May.
Turning attention to our short-term momentum studies, we see that the RSI slid and hit support near its 50 line, while the MACD, although positive, lies below its trigger line and points south. What’s more, there is negative divergence between the RSI and the price action. These indicators suggest that further retreat may be looming before, and if, the bulls decide to shoot again.
A dip below 1.5605 could confirm the case for further declines and could aim for the crossroads of the 1.5545 support and the upside line drawn from the low of the 6th of June, where the bulls may be willing to jump back into the game.
In order to start examining whether the near-term outlook has turned back to the downside, we would like to see a decisive break below the aforementioned upside line and the 1.5545 support. Such a dip could pave the way for the 1.5445 zone, the break of which is possible to aim for the 1.5395 barrier.
