AUD/USD Outlook:
- Fibonacci[1] level holds bulls at bay
- MACD[2] remains above the zero-line
- AUD/USD[3] clings to trendline, as bulls fight to maintain control
Bulls Determined to Break Resistance
A recent surge in the number of Covid-19 infections in Victoria, the second largest state of Australia, has resulted in a reintroduction of restrictions; stalling the possibility of a swift economic recovery. Meanwhile,tensions between the US and China continue to escalate after President Trump imposed a September 15 deadline for the sale of Chinese-owned video company TikTok to an American company on condition that a large portion of the sale is paid to the US government.
From a technical perspective, although price action[4] has favored the bulls since the AUD[5] recovered from March 2020 lows, Fibonacci[6] levels continue to provide strong levels of both support and resistance[7].
The monthly chart below highlights Fibonacci levels from two long-term major moves. The first retracement (pink) represents the historical highs and lows which have yet to be violated and is plotted between the March 2001 low and July 2011 high. The second Fibonacci retracement (blue) will be referred to as the secondary move and is plotted between July 2011 high and the March 2020 low.
Chart Prepared by Tammy Da Costa[9], IG
Since 2014, AUD/USD[10] has spent much of the time between 0.7953 (the 50% retracement of the long-term move) and 0.68259 (the 23.6% retracement of the secondary move). These levels have provided strong support and resistance through much of this period until prices tumbled to March 2020 lows; after which price action soon returned back into this zone.
