Chart of the week – AUD/USD
AUD/USD corrective decline may be over
Short-term technical analysis
- The recent three week decline of -386 pips seen in the AUD/USD from its psychological level of 0.8000 printed on 25 February high (also its 52-week high) has managed to stall right at the lower boundary of its major ascending channel on two occasions; 5 March and 9 March 2021.
- In conjunction, the 4-hour RSI oscillator has flashed a bullish divergence at its oversold region before the AUD/USD staged a rebound of 179 pips from its major ascending channel support to print a high of 0.7801 on 12 March 2021. Also, the 4-hour RSI has managed to find support at around the 50 level on last Friday, 12 March. These observations suggest short-term upside momentum of price action remains intact.
- Given the occurrence of such positive technical elements, its recent corrective decline from its 25 February high may be over. As long as the 0.7710/7675 key short-term pivotal support holds, the AUD/USD may see the start of another impulsive up leg sequence to target the next resistances at 0.7820 and 0.7920 (minor congestion zone formed on 23/24 February 2021 & 76.4% Fibonacci retracement of the decline from 25 February 2021 high to 9 March 2021 low) in the first step.
- On the other hand, a break below 0.7675 invalidates the recovery scenario to see an extension of the corrective decline towards the next support zone of 0.7560/7500 (swing low areas of 21 December 2020/2 February 2021 & the 50% Fibonacci retracement of the recent up move from 30 October 2020 low to 25 February 2021 high).
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.
