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Australia Dollar Technical Analysis: Is AUD/USD Momentum Building?


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AUSTRALIAN DOLLAR, AUD/USD - TALKING POINTS

  • AUD/USD has steadied back in the range after some volatility
  • The Aussie might have bearish momentum unfolding
  • Will a trend eventually assert itself in AUD/USD?
 

AUD/USD TECHNICAL ANALYSIS

The Australian Dollar has been making lower lows and lower highs since making a peak just above 0.8000 in February last year. This is illustrated by descending trend lines above and below the price.

Last week, a spinning top candlestick formation occurred and the price went more than 1% lower the next day. It has since recovered almost all of those loses, but a number of potential resistance levels are just above the price.

The recent high of 0.71684 fell just short of a pivot point at 0.71700. It was also below the prior high of 0.71812. These all remain possible resistance levels.

In addition, the 21, 34 and 55-day simple moving averages (SMA) are clustered nearby and may also offer resistance.

Further up, resistance might be found at the descending trend line which is just below the 100-day SMA, currently near 0.7250. Previous highs at 0.72768 and 0.73143 could also offer resistance.

A bearish triple moving average (TMA) formation requires the price to be below the short term SMA, the latter to be below the medium term SMA and the medium term SMA to be below the long term SMA. All SMAs also need to have a negative gradient.

Looking selectively across multiple SMA time frames, a TMA formation might be in place. The 21, 55 and 100-day SMAs tick these boxes. However, the 10-day and 34-day SMAs are out of order for a TMA formation.

Should the price move below the 10-day SMA and stay there, the order and gradient across all SMAs would fulfill the criteria for a bearish TMA.

On the downside, support could be at the recent lows of 0.70518 and 0.69676 or at the pivot that is between those levels at 0.69913, the latter is the low from November 2020.

Support may also be found at the descending trend lines, currently near 0.6960 and 0.6920.

AUD/USD CHART

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

Daniel McCarthy, Strategist, DailyFX
08 February 2022

 

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