Technical Analysis – AUDUSD struggles at range’s ceiling; positive drive feeble

Anthony Charalambous, XM Investment Research Desk

AUDUSD is dwindling from the ceiling of the range at 0.7344, after recent positive price action thrusted over the simple moving averages (SMAs) and the Ichimoku cloud. The flattening demeanour of the 50-day SMA and the blue Kijun-sen line appears to be aiding the short-term horizontal trajectory, while the rising 100-day SMA and gradual upturn in the 200-day SMA are promoting additional gains.

The short-term oscillators reflect anaemic momentum, endorsing the consolidation in the pair. The MACD, in the positive region, is floating above its red trigger line, while the dipping RSI looks to be stabilizing in the bullish zone. Nevertheless, a shift in the stochastic oscillator is transmitting a negative tone, backing the downside.

Should the price recede further, primary support may arise from the cloud’s upper surface at 0.7215. Next, the reinforced lower band of the cloud at 0.7172, where the converged 50- and 100-day SMAs have been joined by the blue Kijun-sen line, could impede the price from dropping towards the 0.6990 floor of the sideways market. Dipping below this key foundation, limitations may develop from the 0.6963 level, which happens to be the 23.6% Fibonacci retracement of the up leg from 0.5506 to 0.7413, and the neighbouring 0.6921 low. Steeper declines may then target the 200-day SMA at 0.6835 and the support section of 0.6749-0.6806.

To the upside, resistance may originate from a revisit of the roof of the consolidation area at 0.7344. Successfully climbing above that may test the 0.7413 mark before buyers meet the section of highs from 0.7452-0.7483, of July-August 2018. Conquering these, the price may shoot for the 0.7623 and 0.7676 highs from June 2018, before targeting the 0.7737 barrier from April 2018.

Summarizing, in the short-term picture AUDUSD continues to hold a neutral-to-bullish bias above the SMAs and the 0.6990 base.