Technical Analysis – AUDUSD held below downtrend line; lower Bollinger band tests sellers


Anthony Charalambous, XM Investment Research Desk

AUDUSD is in the process of pushing past the 0.6810 level, an area where the swing low, 50-day simple moving average (SMA) and lower-Bollinger band are presently located. The pair’s latest drop to the lower band comes after unsuccessful efforts to breach a fortified region around 0.6925 to 0.6936, which encompasses various resistance obstacles.

The short-term oscillators suggest strengthening negative momentum and are reinforced by the medium-term downtrend line and the declining 40-, 100- and 200-day SMAs. The MACD, in the positive zone, has distanced itself below its red trigger line and nears zero. The downward sloping RSI has slipped below its neutral mark and into the bearish region while the Stochastics are starting to flatten in the oversold area.

If sellers manage to clearly steer below the lower-Bollinger band, the 0.6767 support – which is the 23.6% Fibonacci retracement of the down leg from 0.7081 to 0.6670 – could be next to bring the bears to a standstill. Moving down, the swing lows of 0.6723 and 0.6709 could halt further declines before the 0.6686 support of September 3 and the multi-year trough of 0.6670.

To the upside, initially buyers would need to drive the price above the 0.6831 resistance and 100-day SMA towards the mid-band of 0.6860. Moving higher the buyers may encounter substantial resistance from 0.6894 to 0.6936, where the downtrend line, upper-Bollinger band, 61.8% Fibo and 200-day SMA lie, which would all have to be overtaken for the climb to continue.

Summarizing, the short-term bias remains bearish beneath the downtrend line and only a break above it could bring the negative picture into question.