EUR/AUD is pausing from its climb and appears to be forming a short-term reversal pattern.
But will this former resistance area still hold as support?
Here’s what I’m watching on the hourly time frame:
EUR/AUD 1-hour Forex Chart by TradingView
Stronger than expected headline CPI helped prop the Aussie higher against the shared currency, which in turn was bogged down by mostly downbeat mid-tier European data.
EUR/AUD is now down to the area of interest at the 1.7500 major psychological mark, which has previously held as resistance and also lines up with the neckline of a possible double top pattern.
Are we about to see a bounce or break from here?
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your homework on the Euro and the Australian dollar, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
This pair also seems to be finding support at the pivot point level (1.7510) which lines up with the area of interest and a major psychological mark. Look out for a pickup in upside pressure that could take EUR/AUD back up to the highs around R1 (1.7620) or at least until the next major psychological resistance at 1.7600.
On the other hand, a break below the neckline support could set off a drop that’s the same height as the chart formation. If this happens, watch out for potential bounces from the downside targets at S1 (1.7370) then S2 (1.7260) as well, in case bearish pressure is sustained.
Note that the 100 SMA is above the 200 SMA for now but that the gap between the indicators is narrowing to hint at a possible downward crossover.
Whichever bias you end up trading, don’t forget to practice proper risk management and stay aware of top-tier catalysts that could influence overall market sentiment!
Disclaimer:
Please be aware that the technical analysis content provided herein is for informational and educational purposes only. It should not be construed as trading advice or a suggestion of any specific directional bias. Technical analysis is just one aspect of a comprehensive trading strategy. The technical setups discussed are intended to highlight potential areas of interest that other traders may be observing. Ultimately, all trading decisions, risk management strategies, and their resulting outcomes are the sole responsibility of each individual trader. Please trade responsibly.
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