AUD/USD, AUD/CAD Technical Forecast
- Australian Dollar downtrend is facing technical hurdles
- AUD/USD upside potential countered by downside risks
- Canadian Dollar may gain versus Aussie in days ahead
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AUD/USD Technical Outlook - Neutral
The Australian Dollar spent this past week trying to recover against initial weakness versus the US Dollar. On the AUD/USD daily chart below, this has resulted in the reinforcement of March 2009 lows as near-term support. Prices were unable to sustain losses beyond this psychological barrier, forming a long shadow in the process on August 7. This is a sign of indecision as trade wars offer downside fundamental risks for AUD.
The break above near-term descending resistance from the middle of July needs further technical confirmation to argue that a reversal of the dominant downtrend could be in the works. But, it should nevertheless be noted as a potential for upside progress. The descending channel from the middle of April (pink lines below) seem to be reinstating themselves as resistance ahead of the 0.6827 – 0.6865 barrier.
AUD/USD Daily Chart
Zooming in to the 4-hour chart, we do have the presence of negative RSI divergence. This is a sign of fading momentum to the upside and at times, this can precede consolidation and or a reversal of the prior trend. As such, we may see AUD/USD turn lower ahead and retest 0.6744. A confirmatory close under it then exposes the next area of support at 0.6708.
AUD/USD 4-Hour Chart
AUD/CADTechnical Outlook - Neutral
Against the Canadian Dollar, the Australian Dollar may be facing a similar technical situation. The break above descending resistance from July lacks upside confirmation after prices stalled under the 0.9073 and 0.9105 psychological barrier. Generally speaking, the dominant downtrend in AUD/CAD has held this year thus far as anticipated in my top trading opportunities for 2019.
AUD/CAD Daily Chart
Zooming in on the AUD/CAD 4-hour chart, there appears to be a relatively small bearish Head and Shoulders pattern in the progress of being confirmed. Given the more near-term implications of observing a 4-hour chart, this candlestick formation may precede weakness in AUD/CAD over the next 5 trading days. But, closing under July 2010 lows at 0.8878 opens the door to resuming the dominant downtrend.
AUD/CAD 4-Hout Chart
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--- Written by Daniel Dubrovsky, Currency Analyst for DailyFX.com
To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter