AUD/USD Price Analysis: Seems vulnerable amid a potential bear flag on daily chart
|
- AUD/USD off lows around 0.7350, but not out of the woods yet.
- Bears are testing the bullish commitments at critical daily support.
- Escalating covid concerns remain a drop, with all eyes on the RBA decision.
AUD/USD has bounced back above 0.7350, tracking the rally in the S&P 500 futures amid a recovery in the risk appetite.
Expectations of more monetary stimulus support likely from China combined with the progress on the US infrastructure bill boost the market mood, weighing negatively on the safe-haven US dollar.
Despite the rebound in the aussie, its bearish potential appears intact amid surging covid cases in Australia and extension of the lockdowns across the country. Traders also remain on the back foot ahead of the US ISM Manufacturing PMI and Reserve Bank of Australia’s (RBA) monetary policy decision.
As observed on AUD/USD’s daily chart, the aussie is testing the critical rising trendline support at 0.7330.
A daily closing below the latter could validate a bear flag formation, with a sell-off towards 0.7200 likely on the cards. Ahead of that the spot could test the 0.7300 level.
The 14-day Relative Strength Index (RSI) remains below the midline, allowing room for more declines.
AUD/USD: Daily chart
Meanwhile, any recovery attempts could face stiff resistance around 0.7420, where the bearish 21-Daily Moving Average (DMA) and rising trendline hurdle intersect.
A sustained break above the latter could negate the bearish momentum in the near term.
AUD/USD: Additional levels to consider
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.