The AUD/USD had a strong week last week after a period of consolidation in mid-January. A dovish Fed tone created weakness in the US dollar which added to the bullish move of the Aussie. This was then reinforced by a global ‘risk on’ tone in the equity markets.

The coming week has some high impact fundamental news due in the shape of Retail Sales (m/m), the RBA rate statement and RBA Governor Lowe speaking, so expect to see some volatility in the over the next day or two.

Technical Analysis

AUD/USD Weekly Analysis

Last weeks candlestick shows continuing strength, suggesting the high of that candlestick (0.7295) will get taken out. The price is currently moving in a bullish direction from the support level of 0.7021 to the resistance level 0.7335. Expectations are that this market will test that resistance level.

190204 AUDUSD Weekly

AUD/USD Weekly Chart

Both the secondary indicators (MACD and slow stochastic) have also crossed and given buy signals in the form of a crossover.

AUD/USD Daily Analysis

Whilst the expectation based on the weekly chart is for a continued move higher, buying here is not advised. Identifying potential buy zones is important when looking to trade this market. Levels aren’t hugely clear, so looking for recent areas the market has held should take priority. The round number 0.7200 also acts as a good support area.

190204 AUDUSD Daily

AUD/USD Daily Chart

Buy zones are therefore:

  • The round number 0.7200
  • The round number 0.7100 and
  • The support level and previous low at 0.7076.

Look for rejection at any of these levels and buy targeting the weekly resistance level 0.7335.

Rejection signals can be anything from a candlestick formation or a price pattern, but we advise to ideally use a secondary indicator to confirm the rejection.

The MACD is giving a buy signal and has crossed above the 0 line, indicating a move higher. The slow stochastic is neither over bought or over sold and whilst it looks like it will cross over and give a buy signal, until that happens, the indicator is still showing a neutral tone.

Upside Outweighs Downside Risks

Should the 0.7076 support level be broken then the bias is for this market to move lower and test the previous lows. Until that happens, the bias is higher.

 

 

 

Disclaimer: This should not be used as investment advice and is only an opinion. Do your own research before looking to risk your own capital in the financial markets.

Categories: News