AUD/USD Price Analysis: Bulls testing bearish commitments at resistance
|- AUD/USD is in a current bullish environment according to technical indicators.
- However, bears could be encouraged at near-term resistance structures.
- Longer-term, there will be bearish prospects below 0.6960 and 0.7020.
AUD/USD has been in the hands of the bears while correcting five months of an otherwise uninterrupted bull trend.
The 38.2% Fibonacci retracement is way down at 0.6680, although there is plenty of demand in 0.7020 which will need to be cleared if there is to be an extension as deep.
While the fundamental case for a weaker dollar is compelling given the prospects of a Biden victory and of global reflation amid large scale fiscal stimulus post-election, the following illustrates the technical bearish argument for AUD.
Monthly chart
The market is in a phase of distribution that can be expected to continue if price obeys the impulse and correction wave theory.
For instance, the monthly wick is expected to be filled in when analysing the price action on the weekly chart as follows:
Weekly chart
The latest weekly candlesticks show that the price has corrected the bearish impulse to a resistance structure.
Price can be expected to continue the current downside leg in a fresh bearish impulse to test the bullish commitments between 0.6960 and 0.7020.
Daily chart
The daily chart is consistent with the technically bearish case while the price is below the 21-day moving average and resistance structures.
4-hour bullish environment
Meanwhile, however, the immediate picture is bullish while the price trades above the 21-moving average with MACD above zero.
On the other hand, the trendline resistance and prior near-term support structure could well contain the bulls and encourage selling towards a test of the 0.70 figure.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.