EUR/AUD fell sharply next week after hitting resistance at 1.6170 on December 3rd. However, last Friday, the rate hit support at the prior downside resistance line taken from the high of August 20th, and this week it rebounded. This, combined with the fact that the pair is also trading above the upside support line taken from the low of October 31st, keeps the short-term outlook positive.
That said, in order to get confident on more advances, we would like to see a break above 1.5970, a resistance marked by the high of November 30th. This may encourage the bulls to push the action towards the peak of December 3rd, at 1.6170, or towards the high of September 21st, at 1.6230. If they are not willing to stop in neither barrier, then we could see them climbing towards the peak of August 20th, at 1.6425.
Turning our gaze to the daily oscillators, we see that the RSI rebounded from near its 50 line, while the MACD, although below its trigger line, shows signs of bottoming. Both indicators suggest that the rate may have started gaining upside speed again, which supports the notion for further advances.
In order to start examining the bearish case, we would like to see a dip below 1.5650, marked by the inside swing high of November 18th. This could confirm the dip back below both the aforementioned diagonal lines, and may allow declines towards the low of November 15th, at 1.5450. Slightly lower lies the 1.5355 zone, marked by the lows of October 28th and November 1st, the break of which could allow extensions towards the lows of February 24th and 25th, at around 1.5250.
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