EUR/AUD traded indecisively today, staying slightly above 1.6210, which is the lower end of the sideways range that’s been containing most of the price action since October 1st. The upper bound of that range stands at around 1.6370, and as long as the rate continues to oscillate within those levels, we will hold a flat stance.
A clear and decisive break below 1.6210 may signal the downside exit out of the range and may encourage the bears to take the driver’s seat. This could result in declines towards the 1.6125 zone, the break of which could trigger extensions towards the 1.6075 area, which is the low of October 1st.
Looking at our short-term oscillators, we see that the RSI stands slightly below 50, but has just turned up, while the MACD lies fractionally below both its zero and trigger lines. Both indicators suggest mild downside momentum, but the fact that the RSI turned up adds to our choice to stand pat and wait for the rate to break the range’s lower end before we get comfortable with the downside.
On the upside, we would like to see a break above the upper end of the aforementioned sideways path, at 1.6370, before we start examining whether the bulls have gained the upper hand. Something like that could initially aim for the peak of October 16th, at around 1.6435, the break of which may set the stage for the 1.6475 zone, defined as a resistance by the high of August 30th.
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