The currency pair euro to Australian dollar – EURAUD- has been moving in a downtrend for almost a year. Since March last year, the euro has lost over 4200 points to AUD.

  • correction have just begun
  • bullish engulfing and upward divergence
EURAUD Daily - head and shoulders H&S formation, neckline broken in early January
EURAUD Daily – head and shoulders H&S formation, neckline broken in early Januar

This year also started with declines, the price finally defeated the neckline of the head and shoulders formation. It seems that this is not the end of declines, the supply target may be the level of 1.54, where there is a strong demand zone. However, now the upward correction begins, which can be seen on the four-hour chart below.

EURAUD H4 – bullish engulfment and bullish divergence

A bullish engulfing formation appeared on the H4 interval. The “mother” candle forming this formation changed the sentiment on the MACD. The oscillator entered an upward phase and forms a bullish divergence with the price chart.

This is quite a strong signal for growth. The correction is at an early stage and it is difficult to determine its size at this stage, but it seems that at least the nearest supply zone at 1.5700 may be within its range.

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