Bottom line: AUDUSD long term structure continues to remain bullish against 0.5505 lows in March 2020. Bulls have managed to hit past another resistance at 0.7082 levels, and print above 0.7150 today. It might time for AUDUSD to produce a corrective drop.
Fundamental Outlook:
Dow Jones rose only marginally higher (+0.39%) to close at 26842 yesterday. The indice has lagged behind SPX500 which has surged through 3281, above its June 09 high. Hang Seng and Nikkei trade lower by -0.40% as we prepare to publish the update.
Risk appetite and Global Indices might be facing a major selloff as Geo-political tensions keep rising. UK seems to have joined the list against China off late. The country might ban Chinese Telecom provider Huawei, as confirmed by UK Prime Minister Boris Johnson.
EU summit was successful in drawing a EURO 750 billion stimulus package over the COVID-19 pandemic, yesterday. This has helped EURO to rise through 1.1500 mark, against the US Dollar yesterday. It remains to be seen if risk assets can continue their dominance over USD.
AUDUSD also managed to hit fresh highs around 0.7152 as we prepare to publish today’s updates. The risk related currency pair rose alongside Global Indices. It might come under renewed selling pressure as traders might be looking to take profits. It might be good to keep an eye of Global Equity markets as well.
Technical Analysis:
AUDUSD bulls have managed to print yet another high above 0.7150 mark today. The currency might be preparing to pullback and produce a meaningful corrective drop over the next several weeks. Watch out as bears prepare to drop towards 0.6600 at least.
AUDUSD has managed to rally from 0.5505 through 0.7150 as an impulse wave. Ideally, an impulse should be followed by a corrective wave, lower in this case. Further, the rise has been accompanied by a strong bearish divergence on the RSI as well.
Most traders might be willing to take profits on the long positions initiated earlier as AUDUSD bears prepare to take control back for a while. The first projected target lower might be towards 0.6600 levels, the fibonacci 0.382 retracement of the entire rally.
Prepared by
Harsh Japee, Technical Analyst.
AUDUSD Chart
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