Technical Analysis – AUDUSD tests upper Bollinger Band but upside momentum flimsy

Anthony Charalambous, XM Investment Research Desk

AUDUSD’s recent positive development appears to be struggling around the upper Bollinger band, whilst heavy resistance threatens overhead. That said, the simple moving averages (SMAs) are commanding a strong bullish tone backing further advances in the price.

The short-term oscillators are communicating conflicting signals in directional momentum. The MACD is improving above its trigger and zero lines, while the RSI is rising in bullish territory. However, the stochastic oscillator has posted a bearish shift, promoting a pullback in price. If sentiment picks up, the picture could quickly turn bullish again.

Should the push up be maintained, constraints may originate from the upper Bollinger band and the adjacent 0.7317 high. A step above this could see the bulls being challenged by the fortified resistance section of 0.7324-0.7344. If buyers manage to overcome this zone of multiple highs, the price may hike towards the 0.7393 barrier before revisiting the multi-year peak of 0.7413.

On the flipside, if sellers steer the price downwards, early support may develop from the mid-Bollinger band at 0.7265 and the 50-period SMA merely beneath at 0.7259. Dipping below these, the 0.7237 low could apply some friction ahead of the lower Bollinger band and neighbouring 0.7220 trough. Should this key trough fail to dismiss the decline, the pair may dive for the 0.7197 obstacle before encountering the 100- and 200-period SMAs at 0.7174 and 0.7157 respectively. Additional loss of ground could then send the price to rest at the 0.7144 boundary before slipping towards the 0.7100 handle.

In brief, AUDUSD is trading within the confines of 0.7220 and 0.7344. The pair would need to remain above the SMAs and the mid-Bollinger band of 0.7265, to sustain a worthy neutral-to-bullish tone.