Jump to content

Australian dollar breaks range but lacks follow through; AUD/USD may reverse


Recommended Posts

The Australian dollar busted the range last week but appears to be pausing; building approvals came in soft for April but AUD seems to be shrugging it off and the technical conditions might set up the next move for the Aussie.

 

bg_aud_229435122.jpgSource: Bloomberg

 

Daniel McCarthy | Strategist, | Publication date: Tuesday 30 May 2023 

The Australian dollar remains buoyed on Tuesday despite some soft domestic data. Building approvals for April fell 8.1% month-on-month, below estimates of a 2% rise and -1.0% prior.

The data may support the interest rate markets’ view that the RBA will leave rates unchanged at its monetary policy meeting next week.

AUD/USD technical analysis

AUD/USD broke out of the 0.6565 – 0.6818 range that it had been in for 3 months on its way to making a 6-month at 0.6490 last week.

Prior to piercing the lower edge of that range, the Aussie had several attempts to break the topside but failed. These false breaks can be frustrating for traders trying to play the range.

The run lower also saw the price move below the lower bound of the 21-day Simple Moving Average (SMA) based Bollinger Band.

A break like this is sometimes viewed as a volatility breakout and the price action following such a move can provide clues for near-term direction.

If the price remains outside the band, it might suggest that momentum is evolving in that direction, in this case, bearishness.

However, a close back inside the band may indicate that there is a pause in the bear run or a possible reversal. AUD/USD closed back inside the band on Friday and saw modest gains to start this week.

What is clear is that realised volatility has increased as evidenced by the widening of the Bollinger Band.

Looking at the 1-month At-The-Money (ATM) implied volatility options price, the market has barely moved, currently trading a touch over 10%. This may suggest that currency markets are not overly concerned with this dip in the Aussie.

Support could be at the recent low of 0.6490. Further down, support may lie at the prior low of 0.6387 and the nearby Fibonacci level of 0.6381. The latter is the 78.6% Fibonacci Retracement of the move from the low of 0.6170 to the peak of 0.7158.

On the topside, resistance could be at the nearby breakpoints of 0.6565 and 0.6575 or the previous peaks of 0.6675 and 0.6710. Further up, the 0.6780 – 0.6820 area might offer a more significant resistance zone with several prior highs and breakpoints.

 

original-size.webpSource: TradingView

This information has been prepared by DailyFX, the partner site of IG offering leading forex news and analysis. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • image.png

  • Posts

    • Dopamine emerges as a beacon of innovation in the world of cryptocurrency management, offering a non-custodial, secure, and anonymous mobile app wallet. With over two million downloads and a robust user base, Dopamine is reshaping the landscape of decentralized finance (DeFi) on both Android and iOS platforms. Let's delve into the features and functionalities that make Dopamine a must-have tool for navigating the cryptocurrency market. Key Features: 1. Comprehensive Portfolio Tracking: Dopamine's native token, $DOPE, empowers users to monitor their favorite projects from a vast collection of over 10,000 coins, ensuring informed decision-making in the dynamic crypto market. 2. Enhanced Security Measures: With built-in Anti-Money Laundering services, Dopamine enables users to safeguard their assets by identifying potential fraud and assessing risk scores associated with their wallets. 3. Real-Time Market Insights: Stay ahead of the curve with Dopamine's ability to track market trends and identify coins making significant moves, ensuring users remain informed and proactive in their investment strategies. 4. Cross-Chain NFT Transactions: Seamlessly send and receive NFTs across various blockchains, including Ethereum, BSC, Fusion, and more, providing users with unparalleled flexibility and interoperability. 5. Efficient Information Management: Dopamine simplifies data management by allowing users to save essential information and access it instantly, streamlining their crypto journey with convenience and ease. 6. Convenient Fiat On-Ramp: Facilitating seamless transactions, Dopamine enables users to buy crypto directly from their credit or debit card within the app, eliminating the need for multiple platforms and intermediaries. 7. DeFi Gaming Integration: Dive into the exciting world of decentralized finance gaming with Dopamine, offering users access to a diverse range of DeFi games directly from the app, adding a touch of entertainment to their crypto experience. With its innovative features, commitment to user empowerment and upcoming listing on Bitget exchange, Dopamine stands as a revolutionary platform that caters to the diverse needs of cryptocurrency enthusiasts. As the cryptocurrency market continues to evolve, It remains at the forefront, providing users with a secure, versatile, and intuitive solution for managing their digital assets and exploring new horizons in decentralized finance.
    • Name of stock: Adventus Mining Name of Stock Exchange: TSX Leverage or Share dealing: Share dealing Ticker: ADZN Country of stock: Canada
×
×
  • Create New...
us