AUD / USD Technical Strategy: BEARISH
- AUD Sellers are struggling to maintain momentum after touching 4-month downs
- Positive RSI Divergence Hints on Possible Bounce as RBA Meeting Habits
- Total Positioning Continues carry a bearish bias while under-0.7147
Get help build confidence in your AUD / USD strategy with our free trading guide!
The Australian dollar showed lower after a short corrective recovery against its US counterpart, as expected. Sellers have struggled to get the ground, but to reverse the relief from April last year. One drop to four months of downturns failed to find lasting execution, and set prices back within a known area just below the 0.70 figure. Close proximity to The RBA ruling may have convinced conviction.
Furthermore, positive RSI divergences indicate that ebbing downside momentum can precede a reversal. Confirmation of so much will need a crucial break over the trendline resistance that controls the movement lower from the mid-April swing peak, now at 0.7009. Pushing beyond it would neutralize instant sales pressure and put the 0.7049-73 backward focus area in focus.
Zooms out to the daily chart, general positioning seems to continue to bear bearish implications. AUD / USD price action since the beginning of the year seems to be carving out a descending Triangle pattern, a typical bearish setup whose confirmation would set the stage for resuming 2018 downtrend. To complete it would require a daily close under the support's outer layer of 0.6982. It will be 0.69's next.
To invalidate these wider signals is likely to call too close to triangular peak resistance, now at 0.7147. If you do, you will set the AUD / USD back in the royal area that has existed since the end of last year. To establish a convincing hausian bias, prices will have to penetrate several temporary resistance barriers and secure a close-up over reach of 0.7393.
AUD / USD TRADING RESOURCES
— Posted by Ilya Spivak, Currency Strategist for DailyFX.com
To contact Ilya, use the comment section below or @IlyaSpivak on Twitter