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EUR/AUD Breaks Out Downwards

Yesterday, I talked about buying EUR/AUD at a consolidation support. Well, even though price initially did bounce off the support, it eventually broke through during the 7/26 Asian-European session.

EUR/AUD 1H chart 7/26

(click to enlarge)

Range broken:
- As we can see in the 1H chart, price bounced off 1.4655 but failed to clear 1.4720. 
- The eventual break below 1.4650 shows that bears are back in control of this market.
- EUR/AUD now has the 1.45 area in sight. 
- However, we should note that the pair is at a key support area around 1.45, so the bearish outlook should be limited to that area for now. 

EUR/AUD Weekly Chart 7/26

(click to enlarge)

Critical support cluster:
- The weekly chart shows that EUR/AUD has consolidating since Sept. 2015.
- In this consolidation, price has found support in the 1.4360-1.45 area. 
- Note that the recent test of 1.45 also coincided with a rising trendline.
- We also have the 200-week simple moving average (SMA) around 1.44. 
- After the RSI tagged 70 in September, it has held above 40. If the RSI can hold above 40, it would reflect maintenance of the prevailing bullish momentum. 

Basically, my bullish outlook for EUR/AUD was premature. The prevailing bearish trend since May is still alive but the downside is limited unless price breaks below 1.4350. Let's keep monitoring the pair.