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FX Analysis

Chart of the week – Bearish reversal sighted in AUD/USD


Chart of the week –  AUD/USD

Bearish reversal sighted in AUD/USD

Short-term technical analysis                              

Time stamped: 16 Jan 2022 at 10:30am SGT (click to enlarge chart)

Source: CMC Markets

  • The recent 6-weeks of rally seen in the AUD/USD that recorded a gain of 318 pips from 4 December swing low of 0.6995 has reached a key medium-term pivotal resistance zone of 0.7310/7370 which is defined by the major descending trendline from 25 February 2021 high and a cluster of Fibonacci retracement and expansion levels.
  • Interestingly, it has formed a bearish reversal candlestick pattern called “Evening Doji Star” as depicted on the daily chart based on its recent price actions of 12, 13 and 14 January 2022. These observations suggest that the upside momentum of the recent up move from 4 December 2021 low to 13 January 2022 high has been exhausted and the price actions may start to evolve into a potential medium-term (multi-week) bearish impulsive down move sequence.
  • If the 0.7370 key medium-term pivotal resistance is not surpassed to the upside, AUD/USD may see a further down move to retest 0.7130/7090 and 0.6995 in the first step.
  • On the flipside, a clearance with a 4-hour close above 0.7370 put the multi-week impulsive down move sequence on hold for an extension of the corrective rally towards the next resistance at 0.7550 (also the swing high area of 28 October 2021).

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