The EURAUD increased by 2,600 pips within 15 months, and from July 2017 we can draw a clear bullish channel in which the quotations of this instrument are located. A week ago, the day candle had a shape of a bearish pinbar and since then we observe declines, so far not very dynamic. Since the maximum of this pin is lower than the previous high, we can conclude that the sequence of higher highs and higher lows was interrupted – which is characteristic when the trend is changing, or at least it can herald a correction.
If the downward trend persists, and the level of the last maximum – 1.6190 is not overcome, we can expect a continuation of declines to the nearest support level of 1.5770. Along the way, the pair will encounter a local uptrend line (red) at which the demand side can activate.