EUR/AUD Is Preparing For A Rally to 1.4870 In The Short Term, In The Medium Term There Will Be A Possible Correction To The Downside

One can see very clearly on the H4 and H1 time frames that the pair has broken above a flag with a limit of about 120 pips, starting from the breakout level at 1.4751. If it reaches said limit, we could expect a rally to 1.4870 or 1.4900.

Still, before it continues rallying it is very possible for the pair to retrace back to test the resistance trend line it broke out above, not to mention that on the H1 time frame the pair has reached a resistance level and it has begun a pullback. The test appears logical, considering that in a few hours the market will close and the volatility is disappearing, there is simply no momentum left for another rally.

We should also follow the weekly time frame – we can clearly see that the pair is at a resistance level there, and the bearish bar, which should close in a few hours, is a signal for a reversal.

So the potential move to the upside could turn out to simply be a double top, after which there might be a correction to the downside.