EURAUD Advances above 20-day SMA; Outlook Bullish

Technical analysis of Forex market

EURAUD recorded a stunning rally today, advancing above the 20-day simple moving average (SMA). The RSI is currently increasing positive momentum as it stands above its threshold of 50, hinting that the next move in prices could be on the upside rather than on the downside. The bullish signals are even stronger from the stochastic oscillator as the blue % K line has finally formed a bullish cross with the red %D line and both are heading higher.

If the pair continues the bullish rally, immediate resistance could be met at the 1.6350 three-year high. Above this level, the next barrier for investors to have in mind is 1.6590, identified by the top on August 2015.

Should prices decline, immediate support could be found around the 1.6050 support level, identified by the latest lows. A close below this level could change the current scenario to negative and the price could challenge the 40-SMA at 1.5930 in the daily chart. If there is a drop below this level, the next stop could be at the 23.6% Fibonacci retracement level of the upleg from 1.3625 to 1.6350, near 1.5710.

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In the long term, the bullish outlook remains intact since February 2017 with the moving averages all pointing upwards.