Technical Analysis – AUDUSD suppressed by key resistance section  


Anthony Charalambous, XM Investment Research Desk

AUDUSD is retreating below the 50-period simple moving average (SMA) at 0.7290, after deflecting off the upper Bollinger band, currently encompassed in the resistance ceiling of 0.7324-0.7344. The advancing 100- and 200-period SMAs are promoting strength in the pair, while the 50-period SMA is transmitting a more neutral tone.

The short-term oscillators mirror the recent weakening in the price. Strengthening negative momentum is displayed in the dipping of the RSI underneath its 50 mark and the declining stochastic %K line from the 80 level. Moreover, the MACD, currently in the positive area, appears set to return below its red trigger line.

To the downside, initial support may develop at the lower Bollinger band at 0.7261 and the neighbouring low of 0.7253. Should steeper declines unfold, the pair may encounter the 100-period SMA at 0.7236 ahead of the 0.7220 trough. Deteriorating further, the price may dip towards the 0.7197 barrier before meeting the 200-period SMA at 0.7179.

If buyers manage to drive the pair back above the mid-Bollinger band at 0.7300, the first obstacle they face will be the formidable resistance section of 0.7324-07344. Conquering this, the price may jump towards the 0.7393 barrier before challenging the 0.7413 peak. If buying interest continues, the bulls may even reach the 0.7452 boundary.

Overall, AUDUSD’s neutral-to-bullish tone remains curbed by the heavy resistance zone of 0.7324-0.7344. A break above it or below 0.7220 may set a clearer price direction.