The Euro rallied against the Aussie in early trading on Wednesday, as the sellers just jumped back into the market again to keep the downtrend intact at the moment.
EUR/AUD
The Euro did initially try to rally against the Australian dollar, but it has given back those gains to show signs of hesitation.
At this point, we are sitting just above a major support level in the form of 1.61 that extends down to 1.60. Ultimately, this is a market that has been sideways for a while. And the market breaking down below the 1.60 level could kick off yet another sell-off at that point, and the measured move would be for about 600 pips. I don’t know if we’re going to get that, but clearly, this is a bearish market. If we do break down, I’ll be watching it very closely.
European Energy Concerns and Key Support
Keep in mind that the Europeans, of course, are going to have to worry this winter about energy, possibly. And if that’s the case, the Euro is going to get hammered.
The Australian dollar looks strong, and at this point, the 1.60 level is also an area that goes back a couple of years now. And breaking down below there opens up much more selling pressure. In the short term, a rally from here could open up the possibility of maybe a short-term buying opportunity, but it’s really not until we break above the 1.66 level that I would be a longer-term buy-and-hold type of buyer.
Ultimately, this is a market that continues to see a lot of choppy, sideways action as we are bouncing around the bottom. The next couple of days will be crucial as to where we may go next.
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Christopher Lewis is a technical analyst and market commentator at DailyForex with more than two decades of trading experience in Forex and other leveraged markets. Based in Columbus, Ohio, he specializes in chart-based analysis of major currency pairs, stock indices, commodities, and energy markets, focusing on clear support and resistance levels, trend structure, and risk management. Christopher produces daily written and video analysis for traders who rely on technical setups to navigate volatile market conditions
As seen on: Pairs Of Aces Podcast,The Trader Guy, FXEmpire
