AUD/USD Price Analysis: Balances in a descending triangle, 0.6870 a critical support

The AUD/USD pair is auctioning back and forth in a narrow range of 0.6890-0.6908 in early Tokyo.  The asset has remained flat-to-negative this week after slipping below the critical hurdle of 0.7000. The lack of potential triggers this week has brought a volatility contraction in the asset.

A Descending Triangle formation on the hourly scale has squeezed volatility from the asset. The downward sloping trendline of the descending triangle is plotted from June 16 high at 0.7070 while the horizontal support is placed at 0.6880. The break of the chart pattern is followed by a vertical move. The prolonged downside bias in the asset is bolstering the odds of a southwards break of the chart formation.

The 20- and 50-period Exponential Moving Averages (EMAs) at 0.6900 and 0.6913 are scaling lower, which adds to the downside filters.

While, the Relative Strength Index (RSI) (14) is oscillating in a 40.00-60.00 range, which signals a rangebound move ahead.

A decisive move below Thursday’s low at 0.6868 will activate the downside break of the above-mentioned chart pattern, which will drag the asset towards the May 12 low and the round-level support at 0.6829 and 0.6800 respectively.

Alternatively, the aussie bulls could dictate the asset price if the major overstep Wednesday’s high at 0.6962. This will drive the asset towards the psychological resistance at 0.7000, followed by June 13 high at 0.7035.

AUD/USD hourly chart