The EURAUD has moved above the 200 hour MA again. Yesterday, the pair moved above the 200 hour MA and closed above that MA for 1 hour. The next hour, the price had fallen back below the line. In the last few hours, the price has closed above for two straight hours. The last time the price was above the 200 hour MA was back on June 5th. That is a long time. The 200 hour MA is currently at 1.1805. This is now support.
What does this say?
- The trend has been extremely bearish for the pair. The high in May came in at 1.3014. The low reached 1.1694 on July 23rd. Over that time period 31 days were down, and 14 were up. Over the last 5 days (from the low) 3 of the days have been up. Two days were modestly lower. The momentum is fading.
- The move above the 200 hour MA is not to be taken lightly. Being the first serious move above levels, it will give trader a level to lean against from the buy side for a change.
- Traders short have a reason to cover. There have been a lot of flows into this pair on the combination of AUD strength and EUR weakness.
- The 100 hour MA is sloping to the upside.
How far can it go? The price just moved above the 38.2% of the move down from July 9th high of 1.2096 at the 1.18479. That is just a small leg in the entire move down (see daily chart below). There is room to roam to the upside if the price can remain above the 200 hour and 100 hour MA levels 1.1806 and 1.1791 (and moving higher for the 100 hour MA – blue line).
I am not suggesting we get a huge surge to the upside, the fundamentals don’t support it, but the market may be oversold and a short covering rally seems to be showing some signs of starting.