- EURAUD penetrates the downtrend line
- RSI and stochastic suggest bearish correction
EURAUD skyrocketed to a new three-month high of 1.6693 during yesterday’s session, penetrating the long-term descending trend line to the upside. Currently, the pair is weakening its momentum and something reflected in the technical oscillators as well. The RSI is pointing down above the 50 level, while the stochastic is holding above the 80 level, indicating an overstretched market.
If the market remains above the downtrend line, the next resistance could come from the 1.6800 round number and the restrictive region of 1.6845-1.6900.
On the other hand, a tumble below the 1.6605 barrier could retest the descending trend line and the 20- and the 200-day simple moving averages (SMAs) at 1.6545 and 1.6507 respectively. Steeper decreases could open the door for the bears to test the 1.6450 hurdle around the 50-day SMA.
All in all, EURAUD is making an attempt to change the bearish outlook to a bullish one but traders need to be cautious for a potential downside retracement.
