If this correction level holds for EUR/AUD, the pair might complete a longer-term reversal chart pattern.
Here’s what I’m seeing on the 4-hour time frame.
EUR/AUD is in the middle of a correction to an area of interest that’s been holding since last month.
This is right around the 50% to 61.8% Fibonacci retracement levels, 1.6400 major psychological mark, and dynamic inflection points at the moving averages.
Talk about confluence!If the former resistance-turned-support acts as a ceiling once more, price could resume its slide to this month’s lows and form a head and shoulders pattern.
The 100 SMA is still above the 200 SMA for now, though, so there might be room for the pullback to keep going. Then again, the gap between the indicators is narrowing to hint at a possible bearish crossover.
At the same time, Stochastic is heading north but is closing in on the overbought region to reflect exhaustion among buyers soon.
Better keep your eyes peeled for another wave lower once the oscillator turns south, but also look out for a move past the 61.8% Fib. The latter scenario might mean that euro bulls are refusing to back down!