AUD/USD price analysis: congestion zone at 0.7064-63
AUD/USD price analysis: scope for a corrective move lower. With a congestion zone at 0.7064-63, we look for dips to be bought
Market highlights from the last week
Wednesday 22 July: the US dollar remained on the defensive with a lack of yield support and unease over underlying fundamentals.
Thursday 23 July: risk appetite was cautious on Thursday amid US coronavirus reservations. US-China tensions were also a significant factor in undermining risk appetite.
Friday 24 July: the US dollar remained under pressure amid a lack of confidence in US fundamentals with the dollar index sliding to 22-month lows on Monday.
Monday 27 July: confidence in the US outlook remained fragile on Monday with further unease over coronavirus developments and congressional bickering over fiscal policy.
Tuesday 28 July: commodity currencies were mixed as the US currency pared losses with solid overall support.
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 0.6858 has been clearly broken
Weekly: the pair corrected lower from levels close to the previous swing high of 0.7032 (week commencing 30 December 2019) but that resistance level has now been clearly broken.
Daily: we have a 261.8 per cent extension level located at 0.7354 from 0.5506-0.6214. Previous resistance of 0.7064 (10 June) now becomes support.
What is your sentiment on AUD/USD?
Intraday four-hour: broken out of the wedge formation to the upside. The measured move target of 0.7183 has been achieved. The rally is stalling and there is scope for a correction. Previous support is seen at 0.7063.
Outlook: scope for a corrective move lower. With a congestion zone at 0.7064-63, we look for dips to be bought.
Possible trade setup:
Action: buying at 0.7068 (support)
Stop: 0.7028 (below support) a move through 0.7178 and we look to move stop to entry
Target: 0.7350 (inside 261.8%)
Potential return on risk to first target: R7.0 (reward 282 / risk 40)
Risk warning – your capital is at risk – losses can exceed deposits
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