EUR/AUD’s strong rebound from 1.3642 short term bottom continued last week and reached as high as 1.4178. The development added more credence to the case of medium term trend reversal after defending key support level at 1.3671, on bullish convergence condition in daily MACD.
Initial bias remains on the upside this week for 1.4289 resistance first. Sustained break there will affirm our bullish view and target 1.4721 key resistance next. On the downside, below 1.4064 minor support will turn bias neutral and bring consolidation. But downside should be contained above 1.3874 support and bring another rally.
In the bigger picture, price actions from 1.6587 medium term top are viewed as a corrective pattern. We’d expect strong support from 1.3671 key level to contain downside and bring rebound. Up trend from 1.1602 should not be finished and will resume later. Break of 1.4721 resistance will indicate completion of such correction and turn outlook bullish for retesting 1.6587 high. However, sustained break of 1.3671 will invalidate our bullish view and would turn focus back to 1.1602 long term bottom.
In the longer term picture, the rise from 1.1602 long term bottom isn’t over yet. We’ll keep monitoring the development but there is prospect of extending the rise to 61.8% retracement of 2.1127 to 1.1602 at 1.7488 and above. However, break of 1.3671 should confirm trend reversal and target 1.1602 long term bottom again.