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#1 01-02-2021 08:55:22

johnedward
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From: Paris - France
Registered: 21-12-2009
Posts: 3068
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AUD/USD: a long-term technical analysis outlook

AUD/USD: a long-term technical analysis outlook


The AUD/USD pair, also known as the Australian pair, emerged as one of the strongest currencies during the virus situation. Investors appreciated how the Australian government handled the pandemic, and rising precious metal prices also contributed to the strength of the Australian dollar.

The currency market, and not only, evolves according to fundamental and technical factors. Fundamental analysis, based on economic news and events that can influence prices, plays an important role in the positioning of market players. The same applies to technical analysis.

The overall technical picture for the AUD/USD pair suggests that the recent rally we have seen over the past year may be coming to a halt. The price is encountering strong resistance - which is not to say that it can't overcome it, but given the timing, buyers need to be cautious.

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AUD/USD at key resistance levels - 0.8 and 0.7 key long term levels

Judging from the above chart, this is not the first time the AUD/USD pair has moved vertically. It has done so in the past and will do so in the future as well.

The downtrend prior to last year's low started with a triangle as an inversion pattern. In terms of Elliott Wave Theory, such a triangle appears as the last segment of a complex correction. We see that as the AUD/USD pair broke below the lower edge of the triangle, it continued to form troughs and lower peaks, a series that is representative of a downtrend.

The 0.8 level is attracting attention. By the time the market broke below this level, it had offered resistance. The rejection was so strong for the first time that the market plunged to a new low.

With the current rebound, the AUD/USD pair has returned to the resistance zone. In the world of currency trading, we should not only refer to a resistance or support level (for example, 0.8) but to the area around that level. Therefore, if we use the historical reaction around the current zone, the AUD/USD pair has reached resistance.

If it fails to break above 0.8, the AUD/USD pair risks a rejection at the 0.70 level. During such a move, traders will place their bets on an inverse head and shoulders pattern.

Overall, bulls should be cautious. The best way to trade at current levels, assuming someone was long from last year and bought the drop, is to take partial profits and raise the stop loss to the break-even point to protect the drop. If the market is sufficiently strong and firm above 0.8 at this time, we can say that the uptrend will remain in the plans.

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"Anything worth having is worth going for - all the way." - J.R. Ewing

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