AUD/USD Technical Analysis Forex

AUD/USD to Show Weakness Ahead?

By: Andrei Tratseuski

The progress of the AUD/USD currency pair has been stalled significantly. The pair dropped from roughly 1.10 to below parity, thereafter, rebounding to a 1.06 level. However, currently the currency pair is having a hard time of appreciating as plenty of resistance can be noted.

The AUD/USD currency pair is hovering below pivotal moving averages. The 20-period, the 50-period, and 100-period Simple moving averages are all above the currency pair. In the matter of fact, the AUD/USD currency pair is nearly breaching the 200-period simple moving average. A break below a 1.04 level could further put the AUD/USD currency pair in a downward trend. Currently, the resistance is staggered at 1.4050 which is represented by 20-day simple moving average. The level also coincides with a falling wedge formation (represented by blue lines). A break of resistance could possibly push the currency pair to a 1.06 level.

Currently, a Relative Strength Index (RSI) divergence is negatively hindering the currency pair (orange lines). It is hard to anticipate any meaningful rebound in the currency pair, unless RSI gauge will become favorable. Furthermore, the RSI indicator rose too quickly after a rebound and may stall as it approaches an ever important 70 mark. If a 70 mark of the RSI indicator is not breached, a further potential drop could be staggered.

On support side, a long-term ascending line keeps a trend to the upside. The line is structuring its presence near parity. A break below parity could severely hinder the price action of the AUD/USD currency pair. A timid pullback is currently expected, with a parity level being the most crucial component. A pullback to a parity level will need help on the fundamental front. A loss of risk appetite and reversion back to the risk aversion could help extradite the process.