Yesterday I wrote my analysis on the AUD/CHF, and today we have its mirror image, the EUR/AUD. This pair reached a high last week of 1.2552 and reversed to close the week at 1.2404, forming a weekly pin bar reversal candle in the process. The rejection came at a strong level of Resistance where we see several types of said Resistance coming into play. The reversal level is the top of a descending channel that began forming back in August 2011 and has since been printing lower highs with 5 'touches; confirming the upper channel line. The reversal also came at the 61.8% retracement level for the bearish run from 1.30180 to the start of the recent bullish run at 1.1611, 7 weeks ago. Combine these factors with the Monthly R1 and Weekly Pivot at 1.2436 + 1.2404, and the pair didn't stand a chance from a technical perspective. Now we see the pair falling at a modest pace but has not broken last week's low at time of writing. If it does, there is a strong possibility that we will see a bearish turn over and watch prices fall further. Resistance will come in the form of more Fibo levels such as the 50% at 1.23146, and the 38.2% at 1.2148. There are also some previous closes from January-February at the area around 1.2244 and these could offer support too. The ultimate target will most likely be the bottom of the channel that intersects somewhere around the Monthly S2 way down at 1.1379.
Happy Trading!