Technical Analysis – EURAUD hits fresh highs; some bullish action may be in store

Christina Parthenidou, XM Investment Research Desk

EURAUD gathered significant positive traction this week, breaking above its simple moving averages (SMAs) and the Ichimoku cloud on the four-hour chart.

While the RSI is testing its 70 overbought mark again, increasing the odds for a downside correction, it has yet to reach a peak at a time when the MACD continues to strengthen above its red signal line, suggesting that there might be some extra bullish action in store.

Trend indicators are also in a bullish mood as the 20-period SMA, having crossed above the 50-period SMA, is now pushing efforts to surpass the 200-period SMA.

The next target is now the 1.6400-1.6422 region, a break of which could see another extension towards the 1.6448-1.6467 resistance zone.

Alternatively, should the bears take over, traders will be waiting for a drop below 1.6330 and towards 1.6290. If the latter fails to hold, the spotlight will turn to the 1.6228 obstacle where the 200-period SMA is currently placed.

Summarising, EURAUD is likely to trade positive in the short-term, though downside corrections cannot be ruled out as the pair is within an overbought area.