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Morning Marke Update – AUD/USD

By:
Sylvester Stephen
Updated: Aug 7, 2017, 07:24 UTC

AUD/USD dropped further from 0.797 last week, but formed a temporary low there and recovered later. Initial bias is neutral this week for consolidation

AUD/USD

AUD/USD dropped further from 0.797 last week, but formed a temporary low there and recovered later. Initial bias is neutral this week for consolidation above 0.797 first. The upside recovery should be limited below 0.7985 resistance to bring another fall. Below 0.797, the price will target 0.7850 support zone. However, there is no clear sign of larger down trend resumption yet. Hence we’ll be cautious on strong support from 0.7850 to contain downside and bring a rebound.

Looking at the bigger picture, we’re still treating the price actions from 0.797 low as a correction pattern. And, as long as resistance holds, the long term down trend from 0.7985 is expected to resume sooner or later. Like we said, a break of 0.7915 low will target 0.7850 key support level. However, a firm break of 0.7850 will indicate that fall from 0.797 is developing into a medium term downfall, rather than a sideway pattern. In such case, stronger fall should be seen to target 0.7770.

In the longer term picture, while the down trend from 0.797 might extend lower, we’re anticipating a break at 0.7915 still. We’ll look for some bottoming above there to reverse the medium term trend.

The recent high run on the Aussie has been excellent but the pair has been stuck in a side way pattern of late. A huge accelerating bear run has seen the market rejected through the key high of 0.8002 to now see what looks to be a huge rejection below the important resistance levels. The market has been limited by the resistance band on numerous occasions in the past session. Chasing the Aussie higher here would be a risky move. The momentum is clearly strong but is also incredibly stretched. Staying with the bear run may be profitable in the very near term. However, if profit is taking hits, it could be a sharp reversal. Watch for exhaustion signals. Also the oscillator was close to below 50.

The AUD/USD pair begins today’s trading with clear bearish bias to break the EMA50 and settles below it, which supports the continuation of our bearish overview in the upcoming sessions, waiting to visit 0.7850 level mainly.

Therefore, we will continue to suggest the bearish trend on the intraday basis, noting that breaking the targeted level will extend the bearish wave to reach 0.7770 as a next main station, while the expected decline will remain valid unless we witnessed clear breach and hold above 0.7770 level.

Expected trading range for today is between 0.7850 support and 0.8002

Expected trend for today: Bearish
For more detailed analysis from the author, please visit NoaFX.

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