The Eurozone is due to print a new set of PMI readings today!
Could this rebound or break the support of the EUR/AUD triangle?
On the hourly chart below, you can see that the pair has formed lower tops and found support at 1.6210 area, thus forming a descending triangle.
EUR/AUD 1 Hour Forex Planned by TV
The EUR/AUD has been stuck inside this consolidation pattern for more than two weeks already, and the price has bounced off the resistance again.
The pair is now in the middle of its move down to the bottom of the triangle, but technical indicators are undecided on whether the support will hold.
The moving averages are oscillating to reflect a range-bound move, hardly offering strong directional clues for the time being. However, it is useful to note that the price is below both indicators, so these levels can prove as dynamic resistance levels.
However, Stochastic is already signaling oversold conditions and starting to climb. This means that the EUR/AUD may follow suit as bullish pressure builds up.
In this case, the EUR bulls may look to charge in soon and go either for a bounce from triangle support or a breakout of the triangle top near 1.6250 a minor psychological mark.
If the latter occurs, the pair may be in an upward trend at least as high as the chart pattern or approximately 150 pips.
Just note that the EUR/AUD is moving by Average 124 pips per daySo a breach of 1.6250 with stops at S1 (1.6170) and targeting R2 (1.6420) might be a reasonable bullish target.
PMI readings from Germany and France could be the main catalyst for a breakout today, as strong bullish surprises could be enough to seal the deal for further rate hikes from the ECB. After all, ECB officials and Bank President Lagarde herself have emphasized the need to do more to combat inflation.
Don’t forget to watch the risk sentiment in general, because any big shifts could also dictate the direction of the high-yielding Australian dollar!
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