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.
Daily: We have a 78.6 per cent pullback level located at 0.6709 (from 0.7032-0.5506).
Intraday 4-hour: A channel breakout target was completed at 0.6582 (AB=CD measured move). Current resistance is located at 0.6510.
Outlook: 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
Potential return on risk to first target: R3.3 (reward 165 / risk 50)
Risk warning – your capital is at risk – losses can exceed deposits
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