Bottom line: AUDUSD long term structure continues to remain bullish against 0.5505 lows since March 2020. The currency has managed to hit 0.7400 highs, taking out previous resistance. Bears remain poised to produce a corrective drop towards 0.6750 and 0.6340 levels in the near term.
Fundamental Outlook:
Dow Jones had managed to close around 27312 mark yesterday, higher by +0.57%, after dropping to 26712 levels the day before. As risk aversion gathered pace during the last few trading sessions, US Dollar Index has risen through 94.20 mark. Global equity markets along with Dow Jones might find some bids in the next few days but another stronger wave of continued risk aversion might be underway soon. Investor sentiment might remain fragile over the next several weeks.
AUDUSD continues its selloff hitting 0.7115 lows as we prepare to publish. The risk associated currency pair has erased over 300 pips from its 0.7413 highs on September 01, 2020. The exchange rate shall be taking its cues from global equity markets going further. It might see some bids coming through over the short term though.
Bitcoin remains vulnerable to further losses as the US Dollar continues to gain. The crypto traders around 10400/50 levels as we prepare to publish, lower by around 1500 points from its September 01, 2020 highs. Might bids might be seen below 8000 levels, going further.
Technical Analysis:
AUDUSD remains in control of bears since hitting major resistance around 0.7400 handle early this month. The currency has dropped over 300 pips printing intraday lows around 0.7115 levels today. Intraday pullback rallies remain possible but bears might be inclined to hold below 0.7400 mark.
AUDUSD had earlier rallied from 0.5505 lows in March, through 0.7400 handle, carving an impulse wave. As discussed earlier, an impulse rally is ideally followed by a corrective drop. The currency might be underway to produce a corrective drop potentially towards 0.6340 levels.
Also note that 0.6340 is also the fibonacci 0.618 retracement of the above rally between 0.5505 and 0.7400 respectively. High probability remains for a bullish bounce if prices manage to reach there, going forward. Intraday resistance is seen towards 0.7270/80 zone.
Most traders might be willing to hold short positions initiated earlier and look to add further around 0.7270/80 levels which is resistance zone. Protective stops might be placed above 0.7400 while projected target remain towards 0.6340 levels.
Prepared by
Harsh Japee, Technical Analyst.
AUDUSD Chart
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