Featured Trade: EUR/AUD reacted off from major resistance

EUR/AUD minor downtrend phase remains intact.

Short-term technical outlook on EUR/AUD (Thurs 14 Feb)



Click to enlarge charts

Key elements

  • EUR/AUD recent rebound of 9% (1447 pips) from its 03 Dec 2018 low of 1.5346 to the 03 Jan 2019 spike high of 1.6794 (AUD/USD flash crash) has managed to stall at a major resistance of 1.6585; the major swing high of Aug 2015 and the pull-back resistance of the former long-term secular range support from May 2000 (see weekly chart).
  • The cross pair has continued to drift lower by 6% from the 1.6585 major resistance and started to evolve into a minor descending channel. In addition, reading from the daily RSI oscillator indicates further potential downside momentum as it still has further room to manoeuvre to the downside before it reaches an extreme oversold level of 22 (see daily & 1-hour chart).
  • The key short-term resistance now stands at 1.6040 which is defined by the minor swing high areas of 24 Jan/08 Feb 2019 and close to the 38.2% Fibonacci retracement of the recent slide from 03 Jan 2019 swing high to 01 Feb 2019 low).
  • The hourly Stochastic oscillator has drifted down and it is now coming close to an extreme oversold level of 8 which indicates the risk of a minor bounce towards the intermediate resistance zone of 1.5915/5970 (the upper boundary of the minor descending channel from 03 Jan 2019 swing high & 61.8% Fibonacci retracement of the recent push down from 08 Feb 2019 high to today, 14 Feb current intraday low of 1.5830).

Key Levels (1 to 3 days)

Intermediate resistance: 1.5915/5970

Pivot (key resistance): 1.6040

Supports: 1.5715/5700 & 1.5450

Next resistances: 1.6155 & 1.6400

Conclusion

The EUR/AUD has started to evolve into a minor impulsive down move phase in place since 03 Jan 2019 swing high. Right now, it may see a minor bounce first towards 1.5915/5970 intermediate resistance zone with a maximum limit set at the 1.6040 key short-term pivotal resistance before another potential downleg materialises to target the 1.5175/5700 near-term support. A break below 1.5700 sees further potential downside towards 1.5450 next (the lower boundary of the minor descending channel & 0.764 Fibonacci expansion of the decline from 03 Jan 2019 swing high area to 01 Feb 2019 low projected from 08 Feb 2019 high).

However, a clearance above 1.6040 put the bears on hold for a corrective rebound towards 1.6155 and 1.6400 (61.8% Fibonacci retracement of the 4-weeks of down move from 03 Jan 2019 high to 01 Feb 2019 low).

Charts are from eSignal




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