The interesting thing is that the most recent upleg has occurred even though the Average Directional Movement Index (ADX) is pointing to an almost trendless market. On the other hand, the RSI remains well into bullish territory, but some rally exhaustion appears to be building up lately. The stochastic oscillator is once again the most interesting of the three indicators. The recent EURAUD highs have not been confirmed by a similar print in the stochastic, and the stochastic appears to be hovering inside a symmetric triangle. Both conditions are usually associated with imminent bearish moves, potentially making the bulls’ life more difficult going forward.

Should the bulls remain in control of the market, their first aim would be to test the August 20, 2021 high of 1.6435. This is key for market sentiment and if successfully broken, the path would be clear until 1.6826, the October 20, 2020 high.

On the other hand, the bears would love a push towards the 1.5830-1.5851 area. This is defined by the January 24, 2014 high and the 50-day simple moving average (SMA). A potential break of this area would be a strong win for the bears. Lower, the upper boundary of the October 2022 – March 2023 rectangle and the 100-day SMA at the 1.5685-1.5709 range could put up a stronger fight.