Technical Analysis – AUDUSD finds strong support at 4-month low; creates bearish triangle
Posted on May 8, 2019 at 6:28 am GMT
Melina Deltas, XM Investment Research Desk
AUDUSD is looking more positive as prices have climbed above the 0.7000 handle after bouncing off the four-month low of 0.6960, however, it is creating a descending triangle formation starting from 0.7390 and finding significant support at 0.6960 over the last five months.
Currently, the pair is hovering near the red Tenkan-sen line with the technical indicators suggesting a possible upside correction. The RSI indicator is sloping upwards in the negative territory, while the stochastic oscillator is moving higher after it posted a bullish cross between the %K and %D lines in the daily chart.
Should the pair extend its positive move, the next resistance could come around the 23.6% Fibonacci retracement level of the downleg from 0.8135 to 0.6746, around 0.6960. Slightly above this hurdle, the bearish cross within the 20-and 40-simple moving averages (SMAs) as well as the lower surface of the Ichimoku cloud is taking place near 0.7090. Even higher, the price could meet resistance at the falling trend line of the triangle pattern around 0.7150.
Otherwise, if the there is a break of the strong support of 0.6960, the price could touch 0.6825, taken from the low on January 2016, before meeting the ten-year low of 0.6746.
Summarizing, in the short-term, the price is turning slightly bullish, though, in the medium-term, we are expecting more losses once if there is a daily close below the descending triangle.