AUD/USD PRICE ANALYSIS:
AUD/USD TRADING AT KEY LEVEL OF CONFLUENCE
Q3 sees an interest market dynamic with US earnings season underway and a possible COVID-19 vaccine on the horizon. The US Dollar[1] has shown substantial weakening across G10 and EM currencies which is reflected on AUD/USD[2] as well. Technicals reveals price action at a crossroads with market hesitancy brewing. A few weeks ago I wrote a piece on the AUD/USD[3] bull pennant that has since filled as the pair has pushed up to fresh year highs. Aussie[4] bulls have since reached another point of resistance, will AUD/USD[5] find additional impetus to push above this key zone or will bears take over?
AUD/USD DAILY CHART
Chart prepared by Warren Venketas[6], IG
The daily chart above shows the clean break above the diagonal upper resistance of the bull pennant (yellow). Price has since rallied even further to which is now hovering under 0.7182 (61.8% Fibonacci level) – Fibonacci taken from March 2001 low to June 2011 high. Some bearish divergence is evident as seen by the Relative Strength Index (RSI)[7] with price rising while the RSI is comparatively declining. This contrasting movement may be construed as a potential reversal in price direction.
AUD/USD 4-HOUR CHART
Chart prepared by Warren Venketas[8], IG
Today initial price action can be seen consolidating within the 0.7111 and 0.7182 range. The formation of several doji[9] candlesticks hints at uncertainty by both bulls and bears. At this point in time, bears can be seen defending the 0.7182 (61.8% Fibonacci level) however, price has recently broken below the 0.7111 level of support which may signal a possible change in trend
