The decisions of central banks to lift interest rates brought some serious volatility to financial markets. This probably helped the currency pair EUR/AUD to break from its weeks-old consolidation, and continue in its already-begun uptrend.
EUR/AUD weekly timeframe analysis
A few weeks ago, the currency pair broke out above a level 1.527 and did an exemplary pullback. EUR/AUD clearly rejected the moving average (EMA200), using it just as a temporary stop. OsMA indicator also pointed out that the market may be ready to jump higher.
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Now that the breakout is confirmed with a massive engulfing pattern, we may see the uptrend continue for a few weeks. The next stop is probably around 1.62, which is the closest resistance. However, it could eventually rise to even 1.643, or even higher.
EUR/AUD weekly chart, author’s analysis, source: tradingview.com
EUR/AUD daily timeframe analysis
Now it’s important to have a good entry as we can assume which direction it will go with strong probability. Next week, traders could use the opportunity to jump into a buy position when the currency pair retraces back down to support, where there is also a trend line.
Thus, the best entry in a long trade would be at approximately 1.570. It may take a few days for EUR/AUD to get there, but the traders need to be patient. Inconsiderate entries could easily lead to losses.
EUR/AUD daily chart, author’s analysis, source: tradingview.com
Final thoughts
As the euro gains momentum against all other currencies, the probability of EUR/AUD rising is very high. For example, EUR/USD jumped from just 0.955 to 1.07 in 10 weeks. Fighting against the trend now will not be a good idea.
Wait for a corrective move downward and use it as an opportunity to jump into a long position if you agree the uptrend is likely to continue. There will surely be a chance for a good entry on the 4H or 1H timeframe in a few days. But most importantly, don’t forget to use stoploss. Managing risk is a number one priority.
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