Technical Analysis – AUDUSD selloff loses steam
- AUDUSD in the red again today
- It has managed to drop below 0.6547
- Momentum indicators are mostly bearish
AUDUSD is trading lower again today, recording its fourth consecutive red candle, as the dollar bulls continue to dance to the tune of the US presidential election’s outcome. As a result, AUDUSD has dropped below 0.6547, the lowest level since early August. Despite the RBA remaining hawkish, Trump’s reelection and the recent weak Australian wage data have considerably clipped the AUDUSD’s wings. The downtrend from the September 30 high remains firmly in place, as the market is preparing for Wednesday’s US CPI report.
The momentum indicators are mostly bearish at this juncture. In more detail, the Average Directional Movement Index (ADX) is moving sideways and thus signalling a muted bearish trend in AUDUSD, while the RSI remains stuck below its 50-midpoint. More importantly, the stochastic oscillator has broken below its moving average, thus pointing to a protracted selloff in AUDUSD.
Should the bears remain hungry, they could try to keep AUDUSD below 0.6547, and then gradually push it lower towards the May 31, 20223 low at 0.6458. The door could then be wide open to a extended move towards the September 6, 2023 low at 0.6356, and the chance to record a new one year low.
On the flip side, the bulls are craving a small upleg. They could firstly try to keep AUDUSD above the 61.8% Fibonacci retracement level of the October 13, 2022 – February 2, 2023 uptrend at 0.6547, and then gradually stage a move higher towards the 200-day simple moving average (SMA) at 0.6630. If successful, they could then test the resistance set by the busier 0.6663-0.6686 area, which is defined by the July 14, 2022 low and the 100-day SMA.
To sum up, AUDUSD bears remain in control and potentially prepare for another downleg - particularly if US data remains strong.
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