Technical Analysis – AUDUSD uncovers footing at lower surface of Ichimoku cloud


Anthony Charalambous, XM Investment Research Desk

AUDUSD seems to have found a foothold around the fortified 0.7063 trough. Reinforcing this area is the lower surface of the Ichimoku cloud and the 100-period simple moving average (SMA). Currently, the falling Ichimoku lines are reflecting weakness in positive momentum as are the short-term oscillators.

That said, the red Tenkan-sen line has yet to complete a negative overlap of its blue Kijun-sen line. Moreover, the RSI is pointing upwards in the bearish zone, while the MACD is holding slightly below zero. Worth mentioning is the predominant positive bearing of the SMAs, which may keep the advancing structure in place for a while longer.

To the upside, immediate resistance may arise from the 0.7112 inside swing low. Next, the vicinity of the 50-period SMA at 0.7144 may prove tough to overcome, as it is where the ceiling of the cloud and the Ichimoku lines also currently reside. If buyers manage to push past these obstacles, the nearly 18-month peak of 0.7227 may be up for grabs. Additional gains could then see the zone of highs from 0.7264 to 0.7300 challenge the positive structure.

Alternatively, diving under the significant 0.7063 trough and the 100-period SMA may send the price towards the 0.7014 barrier. Steeper declines may come to a halt at the 200-period SMA at 0.6992, otherwise, sellers may extend losses past the 0.6972 barrier towards the 0.6920 and 0.6832 lows.

Summarizing, the short-to-medium-term bias remains bullish above 0.7063 and the 200-period SMA. To tilt the scale, the price would need to initially breach the 0.6972 level and then 0.6776 key trough.