AUD/USD to extend the rally after a correction due to extreme overbought conditions
|The AUD/USD pair has advanced for an eighth consecutive week, reaching 0.7819, a level that was last seen in April 2018, trading a handful of pips below that level as traders prepare for some weekend rest. The unstoppable rally is set to continue after a mild correction, according to FXStreet’s Chief Analyst Valeria Bednarik.
Key quotes
“Australia reports just a few cases per day and is used to take quick, aggressive measures to keep it contained. On average, the country has been reporting less than 20 new daily cases since last December. The US, on the other hand, has vaccinated over 6 million citizens, but has hardly recurred to restrictive measures and reported roughly 250,000 new cases per day this last week.”
“The market keeps ignoring tensions between Canberra and Beijing, which have been temporarily put aside in these latest shortened weeks. The issue, however, is pending over Australia like a Damocles’ sword and may hit hard the aussie at some point in the near future.”
“The risk of a bearish corrective decline is quite high. Still, bulls retain control and higher highs are on the table. The weekly chart shows that the 20 SMA has crossed above the 200 SMA for the first time since June 2018, both far below the current level. The Momentum indicator eased just modestly within positive levels, while the RSI indicator keeps heading higher at around 71.”
“The 20 DMA heads firmly higher at 0.7630. The indicator stands as a mid-term line in the sand, as a retracement towards the latter won’t affect the dominant bullish trend. Below this level, the pair may dip towards 0.7500 before meeting substantial buying interest. Beyond 0.7820, the pair has quite a clear path towards the 0.7900 price zone.”
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.