Forex Technical Update

Previous: AUD/USD Buoyed by Positive Employment Data...(4/12)




The 4H AUD/USD chart shows a market that formed a double bottom after breaking below a rising trendline. Then, after positive employment data, the market broke above a declining trendline and invalidated the bearish breakout. After the upside push, the RSI reading tagged 70. There is some bullish momentum, but this can be within the context of a sideways market unless the reading holds above 40 and returns above 60, reflecting more persistent bullish momentum forming. If the RSI reading falls below 40, and price falls below 1.03, the market would be seen establishing a range between 1.0240 and 1.0460.

The RSI in the 4H chart is still above 40, while price action is testing the double bottom's resolve while testing the previously broken resistance trendline as support. If this short-term bullish bias remains, the market opens up to first the near-term resistance at 38.2% rretracement near 1.0460. 50% retracement near 1.0540 is also a resistance pivot. Finally, the area around 1.06 is a key resistance cluster with 61.8% retracement and the support of a previous double top. Respect of 1.06 still shows a bearish bias in the medium term.


The 1H chart shows the AUD/USD maintaining some bullish bias. Although the momentum in this time-frame is not clear, price action has so far stayed above the 200 hour simple moving average after breaking to the upside. Also, retracement has been limited to 61.8% so far, and therefore the bullish out look still remains. A break below 1.03 can weaken the bullish scenario.

To the upside, the market needs to push at least back above the 1.0385 pivot to break above the trendline resistance created in this bearish retracement. The 1H RSI should also at least break above 60. With these signs, the market strengthens the case toward the 1.06 handle. Otherwise, a slide below 1.03 keeps the market sideways/bearish.

As I wrap up this update, US retail sales came in positive, giving way to some risk-on trading, and the AUD/USD is back toward the highs from the European session, strengthening the bullish outlook.

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Fan Yang CMT is a trader, analyst, educator and Chief Technical Strategist for FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.


Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.