Consolidation is still the name of the game for EUR/AUD, as the pair dipped back to its triangle support.
Will we see a bounce or a break next?
Check out these potential targets I’m watching on the 4-hour chart.
EUR/AUD 4-hour Forex Chart by TradingView
Dovish central bank biases for both the ECB and RBA have been in play, keeping this pair moving sideways in the past weeks.
However, mixed reports from Australia, particularly when it comes to inflation and employment still seem to be keeping the Aussie afloat. Earlier this week, upbeat Chinese PMI figures also gave the Australian currency a bit of a boost.
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your fundie homework on the euro and Australian dollar, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
With that, EUR/AUD is now back to the bottom of its symmetrical triangle pattern, still deciding whether it would sustain its bearish move or go for another bounce back to the top near R1 (1.6610).
A break below support and S1 (1.6510) might be followed by a sustained bearish drop to the next downside targets at S2 (1.6470) then S3 (1.6410) or a downtrend that’s the same size as the triangle, which spans roughly 300 pips.
Similarly, a bullish break past the top could spur a rally that’s the same height, taking EUR/AUD up to R2 (1.6670) then R3 (1.6710) or way higher.
Flash CPI readings from the eurozone are lined up during the first half of the week and are worth keeping tabs on when trading this one!