AUD/USD price analysis: stalls at the 161.8 per cent extension

AUD/USD price analysis: with the pair touching the 161.8 per cent extension, there is scope for a mild correction to buy into

AUD/USD price                                 

Market highlights from the past week

Tuesday August 11: the US dollar failed to hold initial gains but then secured a fresh advance later in New York as risk appetite dipped and pressure for short covering increased

Wednesday August 12: Australian labour-market data was stronger than expected with an employment increase of 114,000 for July

Thursday August 13: commodity currencies surrendered gains as the US currency recovered ground, but selling pressure was limited

Friday August 14: the US dollar was unable to derive any benefit from the data amid the lack of fresh fiscal stimulus progress and persistent uncertainty over the outlook

Monday August 17: the US dollar remained under pressure as underlying sentiment remained weak. Further selling on Tuesday took the dollar index to 10-day lows and near 26-month lows

AUD/USD price analysis

Let us have a look at the technical viewpoint.

Monthly: traded to a multi-year low of 0.5506 in March. The trend of lower lows at 0.6845 has been clearly broken. What was resistance is now support

Weekly: mixed trading for the past three weeks

Daily: bearish divergence can be seen on the daily chart (the chart makes a higher high while the oscillator makes a lower high). This often indicates the end of a trend or at least a correction to the downside. Holding within an ending-wedge pattern. Trend line resistance is seen at 0.7281

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Intraday four-hour: the previous high is seen at 0.7243, We have a 261.8 per cent extension level located at 0.7237 (from 0.7109-0.7188).

Outlook: with the pair touching the 161.8 per cent extension, there is scope for a mild correction to buy into

Possible trade set-up:

Action: buying at 0.7210 (support)

Stop: 0.7180 (a break of 0.7188 swing high)

Target: 0.7280 (wedge top)

Potential return on risk to first target: R2.3 (reward 70/risk 30)

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Australian Dollar / US Dollar
Daily change
0.67102
Low: 0.667
High: 0.67374
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