In today’s technical analysis, we focus on EUR/AUD, which has been moving within a long-term sideways trend since the beginning of the year. The price was confined between two yellow lines, forming a well-defined rectangle. Recently, however, the pair has made a significant move that shifts the market’s sentiment.
A few days ago, EUR/AUD tested the lower boundary of the rectangle and successfully bounced off it, signaling strong buyer interest. This upward momentum continued, and yesterday the pair broke above the upper boundary, turning resistance into support.
During the overnight Asian session, the price briefly tested this broken resistance level, now acting as support, and the test proved successful. The pair bounced higher, confirming the bullish breakout. As long as the price stays above this newly established support, the sentiment for EUR/AUD remains positive, with buyers maintaining control.
However, traders should remain cautious. If the price closes below the new support level, it would signal a failure of the breakout and a shift back to bearish sentiment, offering a potential selling opportunity.