EUR/AUD rebounded strongly last week but failed to sustain above 1.6038 resistance retreated. Initial bias is neutral this week first. For now, we’d favor the case that decline from 1.6765 has completed at 1.5721 already, on bullish convergence condition in 4 hour MACD. Risk will stay on the upside s long as 1.5721 support holds. Decisive break of 1.6038 will confirm this bullish view and target a test on 1.6765 high. On the downside, break of 1.5721 will extend the decline to 1.5346 support instead.
In the bigger picture, as long as 1.5346 support holds, outlook will remain bullish. Uptrend from 1.1602 (2012 low) is expected to resume sooner or later. Break of 1.6765 will target 61.8% retracement of 2.1127 (2008 high) to 1.1602 at 1.7488 next. However, firm break of 1.5346 key support will indicate trend reversal, with bearish divergence condition in weekly MACD, and turn outlook bearish.
In the longer term picture, the rise from 1.1602 long term bottom (2012 low) is still in progress for 61.8% retracement of 2.1127 to 1.1602 at 1.7488. Firm break there will pave the way to 100% projection of 1.1602 to 1.6587 from 1.3624 at 1.8069. This will remain the favored case as long as 1.5346 remains intact.