Technical Analysis – AUDCHF turns cautiously negative after multi-month low

Marios Hadjikyriacos, XM Investment Research Desk

AUDCHF started the year on the back foot, breaking to the downside the range it had been trading in recent months to briefly touch 0.6620, a level last seen in August. Even though the pair later rebounded, the price structure now consists of lower highs and lower lows, so the outlook seems cautiously negative. A clear break below 0.6620 would turn it firmly negative.

Short term oscillators concur with a mildly bearish picture, but also suggest some stabilization in the negative momentum. The RSI – already below 50 – is pointing lower. Meanwhile, the MACD is flattening, albeit under zero.

Another wave of declines could encounter initial support near 0.6650, an area that stopped the bears back in early October, and where the lower Bollinger band is also located. If violated, the focus would turn to 0.6620, where another downside break would reinforce the negative picture and likely open the door for a test of 0.6535.

If the bulls take the wheel, their first target might be the 0.6735 zone, which also encapsulates the middle Bollinger band. The 50-day simple moving average (SMA) at 0.6757 could also be considered part of this territory. Even higher, the 0.6815 hurdle could provide resistance ahead of the congested 0.6840 region, near where the 200-day SMA and upper Bollinger band are resting as well.

In short, the picture is tentatively negative, with a break beneath 0.6620 needed to reinforce the bearish bias. Otherwise, a push back above 0.6840 could turn the outlook to neutral.