Technical Analysis – AUDUSD capped by 40-day SMA after reversal off multi-year low

Technical Analysis – AUDUSD capped by 40-day SMA after reversal off multi-year low

Technical Analysis – AUDUSD capped by 40-day SMA after reversal off multi-year low

Anthony Charalambous, XM Investment Research Desk

AUDUSD buyers are attempting to retake control after the restricting 40-day simple moving average (SMA), halted the rally, which commenced off the fresh multi-year low of October 2. Momentum seems to have stalled, as also reflected by the short-term oscillators, which contradicts the bigger negative picture.

The MACD, which is in negative areas and marginally below its red trigger line, looks to move above it, while the RSI appears to reclaim its 50-level, implying a more positive outlook. On the other hand, backing the bearish view, is the downtrend line and all the SMAs. Moreover, the 20-day SMA has completed a bearish crossover of the 40-day SMA, reinforcing the possibility of a push lower.

If the bears reemerge and decisively shift the price back down, a more durable congested support region from 0.6686 to 0.6670 comes into play. The level to tackle consists of the inside swing low of 0.6686 from September 3, the trough low of 0.6676 from August 7 and the fresh low of 0.6670, which is a level not seen in more than 10 years. Breaching the barrier could have the price test the February 2009 low of 0.6640.

To the upside, the bulls face a challenging resistance area from 0.6773 to 0.6780, which also encapsulates the bearish crossover of the 20- and 40-day SMAs. Climbing higher, the swing high of 0.6805 could apply some pressure ahead of the 100-day SMA at 0.6865. Even higher, the swing peak of 0.6894 and nearby resistance of 0.6910 may test the buyers, before the downtrend line can be considered.

Overall, the pair remains bearish. However, a shift above the downtrend line and the 200-day SMA could shift the bias back to neutral.

 


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