Technical Analysis – The next leg in AUDUSD lies in the hands of a downtrend line
Gradually, the market momentum is shifting away from the bulls. The Average Directional Movement Index (ADX) appears to be uninterested in the bulls’ efforts and is stuck below its 25-threshold. Similarly, the RSI remains above its midpoint but is failing to make a higher high. More significantly, the stochastic oscillator is edging lower as it prepares to test the support set by its moving average. The outcome of the battle could offer a strong signal on the next AUDUSD leg.
In addition, a double-top pattern appears to be forming with the neckline set at the 0.6595 region. A break below this level is necessary for this bearish pattern to become valid.
Should the bulls finally manage to break the February 2, 2023 downward sloping trendline, they would come up against the 50% Fibonacci retracement level of the April 5, 2022 – October 13, 2022 downtrend at 0.6815. Breaking this level would then open the door for a move towards the 0.7063-0.7091 area.
On the flip side, the bears are preparing for a significant pullback if they successfully defend the February 2, 2023 trendline. They would then have the chance of pushing AUDUSD back inside the aforementioned rectangle and towards the 38.2% Fibonacci retracement at 0.6739. Even lower, they could have a go at the much busier 0.6681-0.6716 range.
To sum up, the February 2, 2023 trendline holds the key to the next AUDUSD leg. If it holds, the bears appear ready to regain market control and stage an aggressive correction.
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
