AUD/USD Price Analysis: Bounded by support and resistance, watch for breakout

AUD/USD bears facing a strong level of the support structure.
Price is trapped and swing traders await a breakout.

Ross J Burland FXStreet

AUD/USD has been in the hands of the bears since the end of August and following five consecutive months of higher highs and lows.

A deeper correction to a 38.2% retracement level brings in the 0.67 area, but there is a fair bit of significant support structure for bears to overcome first.

Additionally, net long AUD positions have bounced back modestly after plunging while net USD positions have fallen back into red amid growing market optimism that another fiscal package will be agreed by US policymakers.

Nevertheless, the following is a top-down analysis that illustrates how the price is bounded on the daily chart by support and resistance and where weekly support makes it a problematic journey to the monthly target.

Monthly chart

The monthly chart shows that the price is in a phase od distribution and the 38.2% Fibonacci retracement level is still some way off.

Weekly chart

The weekly chart is clear. The price is supported at a key structure which is problematic for the bearish case.

Daily chart

There is little that can be done from a swing trading perspective all the while that the price is bounded by support and resistance on the daily time frame.

Swing traders will be open to opportunities once the price has broken to either the upside or, more preferably, to the downside that coincides with the medium-term bearish analysis.

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

EUR/USD stays weak near 1.1850 after dismal German ZEW data

EUR/USD remains in the red near 1.1850 in the European session on Tuesday. A broad US Dollar bullish consolidation combined with a softer risk tone keep the pair undermined alongside downbeat German ZEW sentiment readings for February.

GBP/USD holds losees near 1.3600 after weak UK jobs report

GBP/USD is holding moderate losses near the 1.3600 level in Tuesday's European trading. The United Kingdom employment data suggested worsening labor market conditions, bolstering bets for a BoE interest rate cut next month. This narrative keeps the Pound Sterling under bearish pressure.

Gold pares intraday losses; keeps the red above $4,900 amid receding safe-haven demand

Gold (XAU/USD) attracts some follow-through selling for the second straight day and dives to over a one-week low, around the $4,858 area, heading into the European session on Tuesday.

Canada CPI expected to show sticky inflation in January, still above BoC’s target

Economists see the headline CPI rising by 2.4% in a year to January, still above the BoC’s target and matching December’s increase. On a monthly basis, prices are expected to rise by 0.1%.

The week ahead: Key inflation readings and why the AI trade could be overdone

It is likely to be a quiet start to the week, with US markets closed on Monday for Presidents Day. European markets are higher across the board and gold is clinging to the $5,000 level after the tamer than expected CPI report in the US reduced haven flows to precious metals.

Stellar mixed sentiment caps recovery

Stellar price remains under pressure, trading at $0.170 on Tuesday after failing to close above the key resistance on Sunday. The derivatives metric supports the bearish sentiment, with XLM’s short bets rising among traders and funding rates turning negative.