Key Talking Points:
- AUD/USD looks for further bullish momentum as it sets its eyes on the September high
- ASX 200 gets rejected at the 2020 opening level
AUD/USD COULD FALL BACK INTO A RANGE
The Australian Dollar remains on a strong uptrend against the US Dollar, pushing above the 0.7350 barrier to be within 25 pips from the September 1st high, its highest level dating back to August 2018. But, momentum indicators seem to suggest a possible side-ways price action given that the RSI is flattening around the overbought territory, whilst the MACD is becoming less and less positive.
A daily close above the September high (0.7414) will be needed to cement the continuation of the uptrend, an area which is likely to be challenged given continued weakness in the US Dollar. But short-term corrections cannot be discarded, possibly falling back into the sideways trend seen for most of the past two weeks, between 0.7336 and 0.7220. If so, daily moving averages are likely to offer support in the short-term, with the 50-day and 100-day gearing up to perform a bullish cross around the 0.72 line.
AUD/USD Hourly Chart
Meanwhile, the ASX 200, Australia’s main stock index, is edging lower this Thursday, making it the outlier in a mostly positive session seen in Asia-Pacific. Rejection of further upward momentum started yesterday as the index reached its opening level for the year. This may be caused by some profit-taking as we are in the middle of a shortened week given the US Thanksgiving holiday, and also the perception that equity markets might be venturing into overbought territory.
Today’s biggest loser in the ASX 200 is Virgin Money Ltd, which is down 11.5% after it reported a 77% fall in pre-tax profit in the year to October as the group set aside 500million to face bad debts arising from the pandemic. On the other side of the spectrum, the biggest winner today is TechnologyOne Ltd, up 5.6% after reporting an increase to its total revenue in FY20. Big industry heavyweights like the banking and mining sectors were all taking a pause in the cyclical rally which has seen the index surge more than 12% in the month of November.
ASX 200 Technical analysis
Looking at the daily chart, the first thing to note is that simple moving averages are placed in descending order, pointing to a continuation of bullish momentum, but the RSI is still above overbought territory and the MACD is becoming less positive, pointing to a possible change in the short-term trend. Price action is now sitting right on a horizontal support line at 6640, an important area back in the second half of 2019, halting various downside corrections.
If this level fails to halt bearish pressure, the 76.4% Fibonacci retracement level at 6537 is the next area to focus on before the ASX 200 could crash back towards the 6000 mark. On the upside, Tuesday’s high at 6712 will need to be overcome in order to try and consolidate a bullish run towards 7000, where bearish pressure is likely to increase, as seen back in January/February this year.
ASX 200 Daily Chart
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--- Written by Daniela Sabin Hathorn, Market Analyst
Follow Daniela on Twitter @HathornSabin
