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AUD/USD Price Analysis: Completes an AB-CD formation.

There is scope for mild buying pressure, but gains should be limited. Support seen at 0.6445

Market highlights from the last week

Wednesday 13 May: Commodity currencies retreated significantly with Australian dollar losses compounded by very heavy job losses for April.

Thursday 14 May: After declining sharply following the jobs data, the Australian dollar was unable to regain ground during Thursday amid the combination of weaker risk appetite and a firm US dollar.

Friday 15 May: The Australian dollar came under renewed selling pressure on Friday amid increased fears over the global economic outlook after a slide in US retail sales and AUD/USD retreated to lows near 0.6400.

Monday 18 May: After notable losses over the second half of last week, commodity currencies moved sharply higher on Monday with support from the combination of a weaker US dollar and strong gains in equity markets.

Tuesday 19 May: The Australian dollar maintained a robust tone during Tuesday with further support from firm risk appetite and a fragile US dollar.

AUD/USD Price Analysis

Let us have a look at the technical viewpoint. 

Monthly: Posted a multi-year low of 0.5506 in March. We have seen a recovery of 19.58 per cent from base to peak. Resistance is seen at 0.6747. Technically, there is little to take away from this timeframe. 

Weekly: Previous resistance at 0.6445 has been broken. What was resistance is now support.

AUD/USD Price AnalysisDaily: We have a 78.6 per cent pullback level located at 0.6709 (from 0.7032-0.5506).

AUD/USD Price AnalysisIntraday 4-hour: A channel breakout target was completed at 0.6582 (AB=CD measured move). Current resistance is located at 0.6510. 

AUD/USD Price AnalysisOutlook: There is scope for mild buying pressure, but gains should be limited. With support seen at 0.6445, selling into rallies offers a favourable reward against risk setup.

Possible trade setup

Action: Selling at 0.6610

Stop: 0.6660

Target: 0.6445

Potential return on risk to first target:  R3.3 (reward 165 / risk 50)

Risk warning – your capital is at risk – losses can exceed deposits

Trading spot foreign exchange and futures on margin carries a high level of risk and may not be suitable for all investors. You may lose all your capital. Past performance is not indicative of future results. The high degree of leverage can work against you as well as for you. Before deciding to invest in spot foreign exchange or futures you should carefully consider your investment objectives, level of experience, and risk appetite. If you are in any doubt about investment or the mechanics of such products, you should seek independent financial advice.

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