EUR/AUD traded higher today, after it hit support near the 1.6015 zone. The move has confirmed a higher low on the 4-hour chart, but the pair has yet to signal a higher high. Thus, bearing in mind that a positive reversal is not fully completed yet, we would adopt a cautiously-bullish stance for now.
The move that would complete the reversal, in our view, is a clear break above Friday’s peak, at around 1.6165. Such a move could confirm a failure swing bottom formation and may initially pave the way towards the 1.6250 zone, marked as a resistance by the peak of September 4. The rate may stall around there, or even correct back down. But as long as it would be trading above 1.6165, we would see decent chances for the bulls to re-enter the game. The next positive leg may drive the rate above the 1.6250 hurdle, something that may allow buyers to target the 1.6300 area or the 1.6355 zone, between which the pair traded from August 30 until September 3.
Shifting attention to our short-term oscillators, we see that the RSI rebounded and crossed above its 50 line, while the MACD, although negative, lies above its trigger line and looks ready to obtain a positive sign soon. These indicators suggest that the rate may have started picking up upside speed and support the case for some more near-term advances.
On the downside, we would like to see a clear dip back below 1.6015 before we totally abandon the bullish case. Such a dip could initially aim for the 1.5890 zone, which is slightly below Thursday’s low and provided decent support between July 19 and 23. If the bears are not willing to stop there, then a break lower may extend the slide towards the 1.5825 zone, near the low of April 30.
