Technical Analysis – AUDUSD recoups lost ground but positive signals take a hit

Anthony Charalambous, XM Investment Research Desk

AUDUSD appears to be stalling above the 0.7700 mark after the pair’s recent gains from 0.7582 thrusted the pair over the simple moving averages (SMAs) and the Ichimoku cloud. However, positive sentiment seems to be waning slightly, something also being reflected in the pausing Ichimoku lines. The 50- and 100-period SMAs are endorsing the neutral-to-bullish price tone, after their bearish demeanour somewhat subsided.

The short-term oscillators are demonstrating mixed signals in directional momentum. The MACD is holding above its red trigger line in the positive region, while the RSI is diving back into bullish territory. The stochastic %K line is falling below the 80 level, confirming a minor fading in the price.

If bullish pressures intensify, buyers could encounter initial upside constraints at the 0.7763 and 0.7782 highs respectively. Should the ascent persist, the bulls may target the resistance section of 0.7805-0.7820, the latter of which is the near 34-month peak. Conquering this ceiling could push the price to tackle the 0.7845 barrier before eyeing the 0.7916 peak from March 2018.

If sellers drive the price below the 0.7700 border, quick support could arise from the red Tenkan-sen line at 0.7693 and the adjacent 200-period SMA at 0.7686. Another leg lower could have the price face the 0.7650 trough and the neighbouring 50-period SMA at 0.7645. Deteriorating below the cloud may sink the price towards the 0.7582 trough and the support zone of 0.7556-0.7563.

In conclusion, AUDUSD is exhibiting a neutral-to-positive tone above the SMAs and the 0.7700 boundary. A shift under 0.7556 could undermine the positive structure.