Looking for setups to trade to start your trading week?

I gotchu with EUR/AUD’s possible turn from a technical resistance area!

Let’s take a look at the 1-hour time frame:

EUR/AUD: 1-hour

EUR/AUD 1-hour Forex

EUR/AUD 1-hour Forex Chart by TV

As you can see, the pair is knocking at a range resistance that hasn’t been broken since late June.

Add an overbought Stochastic signal and you can see how at least some euro bears or Aussie bulls will notice.

The Reserve Bank of Australia’s (RBA) policy decision in the next Asian session could make or break EUR/AUD’s recent upswing.

Word around is that the central bank would keep its interest rates steady in August.

Of course, more than a few traders wouldn’t put it past Governor Lowe and his team to raise their interest rates by 25 basis points to 4.35% to underscore their commitment to lower inflation.

Between the RBA possibly surprising markets with a rate hike, China rolling out different stimulus measures and plans, and the Eurozone printing weak PMI reports lately, EUR/AUD could see losses this week.

If the above conditions are met, bearish reversal patterns/ resistance confirmation around the 1.6500 – 1.6550 area would likely spark bearish momentum this week.

The 1.6400 and 1.6375 zones could serve as a potential support area as it may draw in short-term technical buyers / profit takers.  And depending on how the European earnings reports play out, an extended move to the 1.6250 range support area is a possibility.

If the RBA’s event turns out to be surprisingly dovish, or if this week’s market themes weigh on AUD or favor the safe haven(ish) EUR, then I’ll also be watching for an upside breakout confirmation, which could draw in technical buyers and  spark upside momentum to possibly take it as far as the previous area of interest.

What do you think? Will EUR/AUD stay inside its range this week?

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