Ichimoku Kinko Hyo CNH/JPY: The CNH/JPY pair is trading above the Kumo…
EUR/AUD: sideways or bullish?
Information is not investment advice
Since the beginning of 2017, the long-term trend of EUR/AUD has been a confident rise. On the weekly chart, February 2017 marks the beginning of that trend. During most of the year 2018, the currency was trading significantly above the support of the 50-week Moving Average. After having dropped below the 50-week MA at the end of 2018, it went into consolidation and more sideways, although, still above the 50-week MA and secondary support of the 100-week MA.
Currently, there is little evidence to foresee any change to this large trend. For this reason, we are assuming that the trend will continue. Therefore, the question is: will the consolidation and the sideways movement continue, or an upswing is going to take place shortly? A mid-term perspective may help to understand that.
On the daily chart, the price has been mostly fluctuating between the 50-day and the 200-day Moving Average, having dropped twice to the support of 1.6000. Currently, it is testing the November resistance of 1.6320. If it is crossed, it may be a good sign that the price aims at the October high of 1.6400. However, we have to be careful looking at this level breakthrough. The Awesome Oscillator has decreased the fluctuation magnitude almost to zero and is seen drifting along the zero-line for the last two weeks. Preferably, we would like to see it rise with the price to have secondary confirmation for the market’s bullish intensions.
Therefore, the recommendation for this moment would be to hold positions and observe both the price and the indicator movement for more signals of the next step.
Also, following news would be a good help to see through the uncertainty of the EUR/AUD price action.
This week, there are a few high-probability trade ideas I'd like to recommend to you. Trading these setups, be sure to implement a proper risk management approach.
On Thursday, the 2nd of February, the Bank of England will publish its report concerning interest rates and inflation data for the Eurozone. Professionals and investors anticipate that Andrew Bailey’s lead team of policy makers will likely raise interest rates to 4%; the highest in over a decade, for the tenth time in a row.
The first FOMC meeting comes after a buildup of anticipation from traders and investors alike, as the markets await what posture the Fed will take regarding the interest rates; would there be a hike or a cut in interest rates? Recall that the Federal Open Market Committee had previously ended the year 2022 with a 50bps hike, and an indication from Powell, the committee chairman, that the Fed could consider raising interest rates by 75bps in the course of the year 2023.