The Australian dollar hit three-month low (0.7112) on Friday, pressured by fresh risk aversion after announcement that new highly-mutated variant of coronavirus has been detected.
The risk-off mode can escalate as many countries consider imposing fresh restrictions, to prevent scenarios seen during 2020.
The pair is on track to end the fourth consecutive week in red and for the biggest monthly fall since May 2013.
Fresh bears took out strong supports at 0.7204/0.7194 (100/200WMA’s) and pressuring key supports at 0.7106 (2021 low, posted on Aug 20) and 0.7053 (Fibo 38.2% of 0.5509/0.8007, Mar 2020 / Feb 2021 uptrend), break of which would signal a continuation of the downtrend from 0.8007 (2021 high, posted on Feb 25).
Weekly close below converged 100/200WMA’s would generate bearish signal and keep bears fully in play for eventual break of 0.7112 pivot.
Bearish signal is also developing on monthly chart, where bearish engulfing pattern is forming.
Bears remain firmly in play despite oversold conditions on daily chart, however, some price adjustments should be anticipated in the coming sessions.
Res: 0.7170; 0.7192; 0.7238; 0.7291
Sup: 0.7106; 0.7053; 0.7000; 0.6920
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