In overnight trading AUD/USD surged by almost 2%. This is the largest single-session up-move since the end of the previous up trend in January this year. As the chart above shows, this is highly significant given the amount of technical information it generates:
- The move breaks the 9 month downtrend that has seen the AUD/USD tumble from above 80 US cents to recent lows close to 70 US cents.
- The move completes a double bottom reversal pattern (and a "W" reversal pattern)
- The move also broke the resistance line of the "W" at 0.7150 (green line)
- The break upward follows divergence with the RSI at the bottom of the chart. While AUD/USD made a second low at a similar level (green arrows), the RSI made a clearly higher low.
- Despite the positive moves, the RSI around 65% is NOT indicating overbought.
These factors combined point to the beginning of a new uptrend for AUD/USD. Nothing is guaranteed in markets, and a fall below 0.7150 would wipe out this positive signal. Nonetheless, while AUD/USD remains above 0.7150 the technical outlook is positive, highlighting the potential for the pair to move significantly higher.
Disclaimer: CMC Markets Singapore may provide or make available research analysis or reports prepared or issued by entities within the CMC Markets group of companies, located and regulated under the laws in a foreign jurisdictions, in accordance with regulation 32C of the Financial Advisers Regulations. Where such information is issued or promulgated to a person who is not an accredited investor, expert investor or institutional investor, CMC Markets Singapore accepts legal responsibility for the contents of the analysis or report, to the extent required by law. Recipients of such information who are resident in Singapore may contact CMC Markets Singapore on 1800 559 6000 for any matters arising from or in connection with the information.