In the previous weeks EUR/AUD was mentioned by us multiple times. We also analysed EUR/USD, where we were extremely bearish and that was in line with our pessimistic view on the EUR/AUD. All went in line with our expectations and EUR/AUD created a major long-term sell signal.
Let us recap the recent situation. The pair, for the past few weeks, was in a sideways trend and almost every market participant was waiting for a breakout. The breakout happened at the end of the first week of August and brought us a strong sell signal. The previous week, started with the continuation of this movement but eventually, market entered the correction phase and went slightly higher. Decisive bullish movement took place on Friday, when the price went vastly higher but bounced quickly creating a daily shooting star pattern. It seems that this is the end of the bullish correction and we should come back to the bearish scenario.
The closest support is the yellow area and it looks like we are getting closer to break this level and create the right shoulder of the bigger H&S pattern seen on the daily chart. Yes, H&S formation. We should not forget about this as this pattern can be a major negative factor in the long-term and possibly a direct factor supporting the sellers on this market. As for now, we do not have any positive signals on the chart, so an upswing is definitely less likely to happen.
