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EUR/AUD Building a Double Bottom and Breaking a Trendline

EUR/AUD has been bearish since December's high at 1.5332 until the low in mid-January at 1.4005. Since then, the pair has been trading sideways with resistance at 1.44 and a failed attempt to clear the 1.40-1.4005 support area.

EUR/AUD 4H Chart 1/28
(click to enlarge)

The consolidation is also a possible double bottom forming. Meanwhile, price is also breaking a falling trendline from the December high. If the market is not turning bullish, it has turned sideways. The ability to hold above 1.42 (the middle of the current range), will be a good sign for the bullish outlook.

A break above 1.44 will be needed for a bullish outlook. Since the range is around 400 pips, the bullish breakout projection would be to 1.48.

From the 4H chart, we might want to first limit the bullish outlook to the 200-period SMA around 1.4650.

EUR/AUD Daily Chart 1/28

(click to enlarge)

When we look at the daily chart, we can see that the 1.4650 area is also the 50% retracement level. Plus there is a resistance pivot at 1.4705. Indeed we should probably first limit any bullish outlook from the potential double bottom to the 1.4650-1.47 area.


From a fundamental standpoint, the ECB has finally announced QE. So there is not more pricing in more stimulus for the ECB for a while. For the RBA, however, a rate cut is not out of the question as inflation continues to fall. Q4 inflation came in at 0.2% compared to Q3, which is very subdued.