Bullish Retracement Opportunities Emerge as RSI Reaches Extreme Oversold Levels

Forex

Economic

Summary:

This area also lies close to the 0.50 and 0.618 Fibonacci retracement levels of the latest downward movement, adding further technical relevance to the potential recovery target.

BUY EURAUD

EXP

TRADING

1.58115

Entry Price

1.59700

1.57200

1.58011 -0.00070 -0.04%

0.0

Pips

Flat

1.57200

Exit Price

1.58115

Entry Price

1.59700

Data released on Wednesday by the Australian Bureau of Statistics (ABS) showed that Australia's Consumer Price Index (CPI) increased by 4.3% year over year in September, up from 4.0% in August and above market expectations of 4.2%. On a monthly basis, consumer prices rose by 0.8%, also exceeding the forecast of 0.7% and accelerating from the previous month's increase of 0.4%.

Inflationary pressures also remained elevated during the third quarter, with consumer prices rising by 1.3% quarter over quarter, compared with an increase of 0.6% in the second quarter. Meanwhile, underlying inflation, measured by the trimmed mean CPI, increased by 0.3% month over month and 3.7% year over year in September. These figures indicate that underlying price pressures remain persistent despite the central bank's efforts to bring inflation back toward its target.

The latest data confirm that inflationary pressures remain persistent in the Australian economy, complicating the Reserve Bank of Australia's (RBA) monetary policy outlook. As the central bank continues to work toward controlling inflation, the renewed acceleration in consumer prices has fueled speculation about a possible interest rate hike as early as its November meeting. The extent to which these figures influence the RBA's next decision will depend on how policymakers assess the persistence of inflation and its implications for the broader economy.

The European Central Bank (ECB) is scheduled to announce its interest rate decision on Thursday. The central bank is widely expected to leave its deposit rate unchanged at 2.50%, following a cumulative 50-basis-point increase earlier this year. However, persistent energy-driven inflation has raised questions about whether policymakers could consider another rate hike in December, particularly if price pressures remain elevated.

Traders will therefore look for clues about the possibility of a December rate increase and how policymakers assess the balance between persistent energy-driven inflation and the risks to economic growth. The ECB's comments on these competing pressures could influence market expectations for the next stage of monetary policy and shape the euro's near-term direction. Bullish Retracement Opportunities Emerge as RSI Reaches Extreme Oversold Levels_1

Bullish Retracement Opportunities Emerge as RSI Reaches Extreme Oversold Levels_1

Technical Analysis

EURAUD reached a local low of 1.5778 during the previous session before quickly rebounding to the upside. If this level holds and the pair avoids breaking below it, the current price action could create an opportunity for a bullish correction toward local resistance at 1.5971. Meanwhile, the 100-period and 200-period moving averages are positioned at 1.6024 and 1.6099, respectively. As these averages gradually move lower, they could converge with the aforementioned resistance area, potentially creating a zone of attraction for the price if the upward retracement develops. This area also lies close to the 0.50 and 0.618 Fibonacci retracement levels of the latest downward movement, adding further technical relevance to the potential recovery target.

Regarding the oscillators, the Relative Strength Index (RSI) has declined to 19.68, placing it firmly in oversold territory. This extreme reading suggests that bearish momentum may be becoming exhausted, increasing the possibility that buyers could regain control from the current area and trigger a short-term rebound. Meanwhile, the MACD displays a histogram with limited depth, suggesting that bearish momentum may be weakening and that a bullish crossover could be approaching. However, the signal lines remain firmly within bearish territory, indicating that the broader momentum has not yet shifted to the upside. Consequently, any recovery should currently be treated as a corrective retracement within the prevailing bearish movement rather than confirmation of a trend reversal.

Trading Recommendations

Trading direction: Buy

Entry price: 1.5816

Target price: 1.5970

Stop loss: 1.5720

Validity: Nov 06, 2026 15:00:00

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

Risk Disclosure

The risk of loss in trading financial instruments such as stocks, FX, commodities, futures, bonds, ETFs and crypto can be substantial. You may sustain a total loss of the funds that you deposit with your broker. Therefore, you should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources.

No decision to invest should be made without thoroughly conducting due diligence by yourself or consulting with your financial advisors. Our web content might not suit you since we don't know your financial conditions and investment needs. Our financial information might have latency or contain inaccuracy, so you should be fully responsible for any of your trading and investment decisions. The company will not be responsible for your capital loss.

Without getting permission from the website, you are not allowed to copy the website's graphics, texts, or trademarks. Intellectual property rights in the content or data incorporated into this website belong to its providers and exchange merchants.

Recent Searches

Top Searches

Markets

Analysis

User

24/7

Economic Calendar

Education

Data

Bullish Retracement Opportunities Emerge as RSI Reaches Extreme Oversold Levels

Technical Analysis

Risk Disclosure