EUR/AUD Is Forming A Correction After A 3-month Rally

After the rally that lasted for three months, during which EUR/AUD appreciated with 1600 pips – from 1.36260 до 1.52264, the EUR is finally forming a correction of about 560 pips. Despite that, the gap that formed on 24th April 2017 still has not been recovered.

If we examine the monthly time frame, we will notice that the pair has reached a strong support zone around 1.4650 – 1.4700. And it seems that the pair will begin rallying exactly in this zone after several days of consolidation, its possible target being 1.4880- 1.4900.

To the downside the pair could potentially reach 1.4450 – 1.4400, but even after such a drop the gap won’t be recovered at this stage.

On principle the "inverted hammer" bar that formed for March 2017 is a signal for a long-term rally and I doubt that it has ended at this stage. It is possible that after the end of the correction to the downside the rally will continue with its first target being 1.5600 or even above that level.