ICM Technical Analysis : AUD/USD 27 February 2020

ICM Technical Analysis : AUDUSD – 27 February 2020

AUD/USD failed to capitalise on broad-based USD weakness Wednesday, drilling to a multi-year low at 0.6552 amid latest coronavirus headlines. Technically, 0.66 on the H4 gave way and underlined a possible test today at channel support, extended from the low 0.6850, shadowed by the 0.65 handle. Note the relative strength index (RSI) is also testing oversold territory, threatening possible bullish divergence (red line).

On a wider perspective, longer-term movement on the weekly timeframe shook hands with a rising wedge take-profit target at 0.6599 (black arrows – calculated by taking the height of the base and adding it to the breakout point) in the later stages of last week. This pattern took five months to complete; well done to any readers who took part. With price nudging marginally beyond this barrier in recent trade, continued downside on this scale has support at 0.6359 (not visible on the screen) to target.

The key observation on the daily timeframe is the taking of support at 0.6677 last week, now a serving resistance level. The next support target beyond 0.6677 falls in around 0.6508.

Areas of consideration:

Those who read Wednesday’s piece may recall the following (italics):

Should 0.66 fall through today, which going by the current state of the H4 candles looks to be the case, breakout sellers likely have eyes for H4 channel support (highlighted above), and the 0.65 handle, which happens to merge with the next daily support target mentioned above at 0.6508.

As such, a decisive H4 close beneath 0.66 will likely entice selling, given the surrounding technical factors. A retest at 0.66 as resistance offers additional confirmation, more so if the H4 rejection candle closes by way of a bearish candlestick signal (entry and risk can then be set according to its structure).

Well done to traders who managed a sell south of 0.66, preferably on the retest seen in early trade yesterday. As highlighted above, H4 channel support is likely next on tap, as is the 0.65 handle and daily support from 0.6508.

Disclaimer: The information contained in this material is intended for general advice only.