A reversal may be brewing for EURAUD as the pair has formed a triple top formation on its 4-hour time frame and could be due for a break lower. Price is testing the neckline at the 1.5650 minor psychological mark and a move below this could send it down by at least 150 pips or the same height as the formation.
The 100 SMA is above the longer-term 200 SMA so the path of least resistance is still to the upside. This means that there’s a chance the longer-term uptrend could still resume. However, the gap between the moving averages is narrowing to signal weakening bullish momentum.
Stochastic is pulling up from oversold levels, though, so buying pressure could be in play. This could take price up for another test of the resistance around the 1.5750 minor psychological mark.
There are no major reports due from the euro zone or Australia today, which suggests that market sentiment or geopolitical updates could push this pair around. Preliminary GDP readings from the region’s top economies are lined up mid-week, along with the euro zone flash GDP.
Analysts are expecting to see another 0.6% expansion for Q4 2017 and a stronger than expected read could be enough to bolster ECB tightening expectations. Keep in mind, however, that policymakers have been more mindful of downside inflationary pressures and euro strength these days.
The Australian employment change for January could show a 15.2K increase in hiring, less than half as much as the previous month’s 34.2K gain. Meanwhile, the unemployment rate is expected to stay unchanged at 5.5%.
By Kate Curtis from Trader’s Way