The EUR/AUD is an interesting pair to watch in the coming days and weeks.
Wave Analysis and Overview
The weekly chart shows that EUR/AUD has started a new large impulsive uptrend within a potential Wave C. It has broken numerous resistance levels along its way and appears to be heading higher yet.
Fundamentally this is correlated with increasingly strong economic data from the Eurozone and a more hawkish ECB relative to the more dovish RBA and weaker Australian data.
Looking at the daily chart, price action of recent weeks appears to form part of a large Wave 3, containing multiple extensions within it (see the various coloured waves 1-2,1-2,1-2.1-2)
Zooming into the 4hour chart, it would appear that the first impulse extension (Dark Blue waves) is virtually complete. Price is stalling near one of the last remaining resistance trend-lines (red lines). Some downward correction is now expected to the potential bounce zone, which is highlighted by the dark rectangle. Please note that the Fibonacci levels shown may not be entirely accurate because Blue Wave 5 may not be complete yet.
Bullish Trade Option:
A bounce within the POC zone that causes price to come back into bullish alignment with the 21EMA could be a good signal for upwards continuation (i.e. dark turquoise Wave 5).
The main target is around 1.5940 at the -27.2 Fib level of dark turquoise Wave 3.
This scenario could also synchronize with the end of the AUD/USD bullish correction as well the continuation of the EUR/USD uptrend, thus monitoring price in these two pairs is good for cross-correlation.
Wishing you clear and successful trading,
Hubert is a trader who uses wave patterns and the ecs.SWAT method. He is also doing analysis and articles for the EliteCurrenSea.com website.