Australian Dollar Forecast: AUD/USD Price Struggles to Build Higher
Aussie Dollar vs US Dollar Technical Outlook
- Markets invest in riskier assets on the back of positive news about coronavirus vaccine
- AUD vs USD price chart exposes an invalidated continuation pattern
AUD/USD Price – Hesitant Traders
Last week, AUD/USD hit a four-week high of 0.7001without committing to a new bull trend. Ultimately, the pair retreated and closed the weekly candlestick with a Doji pattern highlining the market’s indecision at that point. Alongside that, the Relative Strength Index (RSI) remained flat around 60 and reflected a paused bullish momentum.
The market ignored yesterday fresh US-China tensions and rallied on hopes of a coronavirus vaccine. An experimental jab developed by the US company Moderna generated safe responses in all volunteers and paved the way to move to an advanced stage in the vaccine trials.
AUD/USD DAILY PRICE CHART (AUG 20, 2018 – July 16, 2020) Zoomed Out
AUD/USD DAILY PRICE CHART (April 13 – July 16, 2020) Zoomed IN
In mid-June, AUD/USD failed on multiple occasions to break through the lower trading zone, repeatedly rebuffing efforts to put bears back in charge. As we see the price rallied later towards the high end of the current trading zone 0.6827 – 0.7015. Yesterday the pair surged to a five-week high of 0.7037, yet failed to climb to the higher zone and highlighted that bulls were losing steam.
Another failure in closing above the high end of the zone could reverse the current trend towards the low end of the zone, and any further close below that level may encourage bears to revisit 0.6684– a monthly support level.
With that said, a close above the high end of the zone may open up a push behind AUD/USD towards 0.7300 – a psychologically significant level and a further close above that could encourage them to extend the rally towards 0.7414 –a monthly resistance level.
AUD/USD Four-Hour PRICE CHART (June 10 – July 16, 2020)
At the start of July, AUD/USD started an upside move creating higher highs with higher lows. Last week, the pair paused its upward momentum and traded in a bullish rectangle. Yesterday the price broke above the upper line of this continuation pattern however, today the has returned today to the range and negated the bullish rectangle’s signal.
To conclude, a break above the June 10 high at 0.7064 may cause a rally towards 0.7160, while a break below the July 14 low at 0.6921 could send AUDUSD towards 0.6845.Nonetheless, the weekly support and resistance levels underscored on the four-hour chart should be kept in focus.
Written By: Mahmoud Alkudsi, Market Analyst
Please feel free to contact me on Twitter: @Malkudsi
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.