Last week EUR/AUD touched and successfully bounced off the 200-Day Moving Average, bringing up the possibility of a correction towards 1.5030 for a re-test of the resistance.
The correction fell short of the target, stopping at 1.4965 and testing this area three times. During the European session the pair started falling back towards the 200-Day Moving average. Following the U.S. NFP report, the pair collapsed below the moving average and immediately reached 61.8% Fibonacci retracement between 1.4048 – 1.5830.
A close below the 200-Day Moving Average indicates a longer term downtrend is ahead. Below 1.4721 the pair will focus towards 1.4525 and 1.4449, the main price pivot zones dating back to 2013.
Daily Stochastic is in the oversold territory, yet price could still cover the distance in a few days since the previous support levels have been invalidated.
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Prepared by Alexandru Z., Chief Currency Strategist at Capital Trust Markets
