EURAUD should soon test the 1.568 as the closest support

On Thursday, the strongest currency among majors is the Australian Dollar. From the fundamental point of view, we did not get anything, which would support this move, which forces us to be a bit suspicious about it. In today’s analysis, we will check the situation on EURAUD, which is in the long-term up trend and currently aiming for key support.

I am covering the situation on the EURAUD as for a long time, the pair moves very technically. From March, till October, the pair created a huge double bottom formation, which after the breakout of the orange resistance on the 1.53 gave us a proper, long-term buy signal. The price hesitated a bit and for almost three months stayed inside of a rectangle (green), between the mentioned support and a new resistance on the 1.568 (yellow). On the 15th of December, they finally decided to continue to move started in October and broke the resistance, climbing significantly higher. That gave us a new buy signal.

For the past two days, we have had a bearish correction of this move. This is pretty normal that the broken resistances are tested as supports. This scenario is our base scenario now. The current drop is just to test the 1.568 area as a support and after a bounce, the price should continue to climb higher.

On the other hand, EURAUD dropping back below the yellow area would be a strong sell signal, because it would mean that the whole rise from the past few days was fake and that most likely all buyers will abandon their long positions, driving the price even lower.