EUR/AUD: Bulls will react more aggressively above 1.6420 level

Overview: EUR/AUD has corrected a daily bullish impulse in a decelerating decline which gives rise to prospects of an upside continuation. From a daily perspective, we can see that the price has drawn back towards a 50% mean reversion, significant enough to expect a continuation within a bullish W-formation. The price will move up in the coming week and the bullish formation will be formed. Easing coronavirus restrictions may continue to underpin AUD. Better-than-expected economic data may sway the RBA to retain its wait-and-see approach in the near term. Deteriorating Australia-China relations may undermine the nation’s economic recovery. The Australian Dollar looks set to extend its push to fresh yearly highs in the coming week, buoyed by robust economic data and the nation’s progressive return to normalcy. So we can say the pair can trade higher in the coming week and rise towards the high momentum. These positive developments may diminish the probability that the Reserve Bank of Australia will adjust its monetary policy settings in the near term. EUR/AUD is working up towards a high probability bullish trade setup. Bulls will want to see a break to the upside through the 4-hour MA.

 

Technical analysis: From the technical point of view can say that the bullish momentum is used to be created. The pair is getting bullish impulse; The following illustrates the daily price action and a trade set up that can be monitored from a 4-hour perspective. From a 4-hour perspective, bulls may want to wait for the price to break higher and enter on a pullback from the newly formed support structure. MACD confirms that the price is in a bullish environment, but it is still below the moving average. The kind of tug and war is going between the bulls and bears, the price is neutral right now but we suggest our buyers to go for the buy-side in the market as the market will show its positive side soon. The price is in a range-bound situation .so it is very tricky to see the next step of the market. Let’s wait for the session movement and till then buyers can go for the short-term buy. The current status of the market is 1.6308 and the support will be 1.6005 followed by 1.5814 and the resistance is 1.6580 followed by 1.6911.

Trade Idea: We can suggest that buyers should go for 1.6311 and target will be 1.6450 followed 1.6570 and stop loss will be 1.6154.

 

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