AUDUSD Well-Placed to Bounce Higher
AUDUSD technical analysis:
- AUDUSD has been in a downtrend for most of this year.
- However, having reached trendline support, it could be ready to rally.
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AUDUSD ready to tick higher
AUDUSD has traded in a well-defined downward channel since late January this year. Now, having hit the channel support line, which has already limited the downside several times, it looks ready to edge up again towards the middle of the channel and perhaps as far as the resistance line.
AUDUSD Price Chart, Daily Timeframe (January 12 – August 16, 2018)
As the chart above shows, the support line sits currently at 0.7214 and the price has already this session bounced from it to 0.7275 at the time of writing. If that rally continues, there will be several near-term targets in sight: the 20-day moving average at 0.7362, the 50-day moving average at 0.7385 and then the trendline resistance at 0.7425.
While that will be hard to break through, a climb above it would bring the August 9 high at 0.7454 and the 100-day moving average at 0.7464 into view.
Note, though, that a drop below trendline support at 0.7214 could bring steep losses so from a trading perspective it would be wise to place a stop just below there, perhaps at the 0.72 “round number”.
From a fundamental perspective, any rally would reflect the latest improvement in market sentiment, which has prompted a rally in “risk on” assets like the Australian Dollar against “safe havens” like its US counterpart.
Note that AUD is seen sometimes as a proxy for China and has therefore been helped by news that US-China trade talks will resume later this month – a development that could lead eventually to a ceasefire.
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--- Written by Martin Essex, Analyst and Editor
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.