Technical Analysis – EURAUD breaks below 200-day moving average

Anthony Charalambous, XM Investment Research Desk

EURAUD penetrated below the 200-day simple moving average (SMA) after turning back down from 1.6431 and clearing below the noisy area of previous supports and the SMAs around 1.6200.

The short-term oscillators reflect a freeze in momentum but lean towards the negative picture. The MACD is distancing itself below its red trigger line in the negative zone, while the RSI, slightly above the 30 level has turned marginally up. Further backing the negative outlook, are the downward slopes of the 20- and 50-day SMAs.

If selling interest picks up, initial support could come from 1.6024 ahead of the 1.5903 swing low of September 12 and marginally lower, the eleven-week low of 1.5893. Moving down, the 1.5805 trough from April 26 could interrupt the test of the four-month low of 1.5682.

If buyers manage to push back above the 1.6100 resistance, which is the 76.4% Fibonacci retracement of the up leg from 1.5893 to 1.6784 and where the 200-day SMA lies, the tougher resistance region of 1.6204 to 1.6234 could challenge the bulls. Overcoming the SMAs and 61.8% Fibo, the 50.0% Fibo of 1.6340 could apply downside pressure ahead of the swing peak of 1.6431.

Summarizing, the short-term bias looks bearish and a close below 1.5893 would reinforce that. However, a shift above 1.6431 could increase the odds for further gains.