AUD/USD technical analysis: Aussie may end five-day winning streak

AUD/USD 4-hour chart is reporting bearish divergence of key indicators.
China's factory deflation deepened in August, Aussie business confidence deteriorated.
AUD/USD could suffer a deeper pullback to levels below 0.6840 and snap its five-day winning streak.

Omkar Godbole FXStreet Contributor

AUD/USD's five-day winning streak may end, as key technical indicators have diverged in favor of the bears.

For instance, the moving average convergence divergence histogram has crossed below zero on the 4-hour chart, having produced lower highs as opposed to higher highs on AUD/USD in the last few days.

The 4-hour chart relative strength index (RSI) is also reporting a bearish divergence.

Further, bearish technical developments are backed by signs of worsening economic slowdown in China - the country's factory deflation deepened in August, according to the producer price index released at 01:30 GMT.

Meanwhile, the National Bank of Australia also reported a drop in the business confidence and business conditions index in August.

The pair, therefore, risks falling to the 4-hour chart support at 0.6836 and could end the day on a negative note for the first time since Sept. 2.

As of writing, AUD/USD is trading at 0.6854, having hit a high of 0.6870 before the release of China's inflation data at 01:30 GMT.

4-hour chart

Trend: Deeper pullback likely

Pivot points

1. R3 0.6919
2. R2 0.6898
3. R1 0.688
PP 0.6859
1. S1 0.6841
2. S2 0.682
3. S3 0.6802

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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