Technical Overview
The EURAUD cross advanced on the overnight trading session, expecting the minutes from the last Reserve Australia Bank (RBA) interest rate decision meeting, where policymakers decided to keep unchanged the rate at 0.1% for the second month in a row.
Source: TradingEconomics.com
On the technical side, the following 12-hour chart shows the short-term market sentiment unfolded by the 90-day high and low range, which illustrates the cross consolidating in the extreme bearish sentiment zone.
The bullish candlestick formation developed during the recent trading sessions carries to suspect the possibility of a short-term bounce. This bounce could find strike the level 1.62374 that corresponds to the resistance of the extreme bearish zone.
On the other hand, the short-term primary trend plotted in blue shows the bearish bias that remains in progress. The secondary trend also shows the intraday downward acceleration, which dragged the price until 1.60408, where the cross found support. Likewise, the bounce observed on the EMA(60) to Close Index carries to support the possibility of a limited recovery.
Technical Outlook
The short-term Elliott wave view for the EURAUD cross shows the downward progress of the incomplete five-wave sequence of Minute degree labeled in black, suggesting a limited recovery in the following trading sessions.
The next 4-hour chart shows the bearish movement subdivided into a five-wave sequence of Minute degree identified in black. It began on October 20th at 1.68273 and found its temporary bottom at 1.60408 on December 11th.
The previous figure illustrates the price looks advancing in its fifth wave in black, which after the bottom reached on the last Friday 11 session completed its wave (iii) of Minuette degree labeled in blue. In this context, according to the Elliott wave theory, the price action should start to develop a corrective formation, which could find resistance in the supply zone between 1.61786 and 1.62271.
On the other hand, considering that the wave ((iii)) in black looks like the extended wave, the fifth wave could have a limited extension. In this context, the lesser degree structure of the wave ((v)) could pierce slightly below the end of wave (iii) in blue.
In conclusion, the EURAUD cross shows the possibility of a limited recovery, which could strike the supply zone between 1.61786 and 1.62271, where the price could start to consolidate in a sideways range with support at the end of wave (iii) at 1.60408. On the other hand, if the cross surpasses the supply zone, it would indicate further recoveries, and the price could start a bullish rally. Finally, the invalidation level of the current bearish scenario locates at 1.62872.
