Technical analysis: AUD/USD heads for key support base, bearish tone grows

Anthony Charalambous, CFTe XM

AUDUSD has been declining for a month now and is tracing the lower Bollinger band, managing to log a near 13-month low of 0.7062 on its way towards the critical support base of 0.6963-0.7020. The sliding simple moving averages (SMAs) are sponsoring a slight negative tilt in the pair.

The short-term oscillators are transmitting conflicting signals in directional impetus. The MACD is gliding beneath its red trigger line in the negative region, endorsing additional weakening in the pair. The RSI, in oversold territory, is turning upwards, while the stochastic oscillator is exhibiting a bullish charge, both suggesting that buyers are fighting back.

If negative pressures endure and detach the price from the 0.7105 barrier, a push down could encounter some friction around the nearby lower Bollinger band, currently in the vicinity of the near 13-month low of 0.7062. Not too far below is the crucial 0.6963-0.7020 support foundation, which has held since July 2020. Should this important boundary fail to terminate additional declines in the pair, the price may then aim for the 0.6806 and 0.6776 lows reached in the later part of June 2020. A deeper retracement could then seek out the 0.6685 inside swing high from March 2020.

If buyers manage to find their feet at the 0.7105 level, initial upside hindrance could stem from the inside swing low of 0.7169. Gaining more traction, the price may target the mid-Bollinger band at 0.7243 and the adjacent 0.7276 barrier. Breaching these obstacles too, buyers could tackle a zone of resistance formed between the 100-day SMA at 0.7326 and the 0.7370 high. Recouping more lost ground, the bulls may then eye the 0.7431-0.7470 resistance band.

Summarizing, AUDUSD is currently conveying a neutral-to-bearish tone in the medium-term timeframe below the SMAs. That said, for a bullish vibe to return, the price would need to climb back above the 0.7555 high. Moreover, for the broader positive outlook to endure, the price would need to remain above the 0.6963-0.7020 base.

Author

Anthony Charalambous, CFTe

Anthony Charalambous joined XM in 2019 and specializes in preparing daily technical analysis, using his years of trading experience to provide detailed forecasting for all major asset classes such as forex, indices, commodities and equities.

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