AUDUSD, Daily
AUDUSD rallied on the back of positive developments in the price of copper and Chinese stock market yesterday. Today the pair hit a resistance level at 0.7045 and after a brief move above the level the pair failed to maintain the gains and rolled over. The 0.7045 level supported price on August 24th and created a weekly low that was later on penetrated. Stochastics is trying to move higher from oversold levels but in a downtrend such moves are typical and don’t provide the same value as in a sideways range. Oscillators tend to fluctuate near oversold levels when markets are trending lower.
The fact that 2 sd regression channel high coincides with today’s high suggests that this level is a potential turning point for AUDUSD. The level also coincides roughly with a 23.6% Fibonacci level at .4029. The next support level is at the recent low (0.6900) while weekly chart suggests that the pair has further to fall and should eventually hit a support level at 0.6532.
AUDUSD, 240 min
Traditional trend line based channel analysis in 4h chart provides us a different picture. Price has broken out of the bearish channel and is currently trading at the upper Bollinger Bands but also above 50 SMA. Stochastics is turning down from overbought zone indicating that upside momentum is reversing. However, the fact that price has been able to climb above the 50 SMA for the first time since the pair started to move lower in August 21st could complicates the picture for shorts. Another potential complication is the pin bar that suggests price could move higher from the moving average support. The next resistance level is at 0.7099 while support levels can be found at 0.7015, 0.6950 and 0.6895.
AUDUSD, 60 min
The hourly timeframe reveals how price has created a pinbar at an intraday support at 0.7020, a level that coincided with the lower Bollinger Bands. This led to a rally that tried to challenge the latest high. At the time of writing this challenge is failing as the pair hasn’t been able to push into new highs.
Conclusion
AUDUSD is technically in a down trend and fundamentally should remain so as the Fed is more likely to raise rates than the RBA this year. The next significant long term support level is at 0.6532 which could be reached by November this year if the decline continues at the same rate as the pair has declined since May this year. Short term price has rallied to a previous support that has potential to turn price lower. However, there has been no strong momentum to the downside after price created a shooting star candle in the 4h chart in the Asian session today. Price has been fluctuating between 0.7015 and 0.7060 and has found support from 4h 50 SMA. This increases probabilities of price breaking higher and testing the next resistance level at 0.7099. Those looking to short at current levels should seek for bearish signals in the lower intraday timeframes before initiating shorts. If price keeps on making higher lows, look for a move to 0.7099. If price breaks lower from current levels my target 1 is at 0.6960 and target 2 at 0.6920. Lower highs in intraday resolutions indicate weakness and increase likelyhood that price will move lower.