Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 78% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.

Chart of the week – AUD/USD corrective decline may be over

Chart of the week – AUD/USD

AUD/USD corrective decline may be over

Short-term technical analysis

Time stamped: 13 Mar 2021 at 2:30pm SGT 

  • 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 is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.