AUD/USD price analysis: evening doji star posted

AUD/USD price analysis: there is scope for mild buying in morning trade but, with a topping formation, we look for this to be limited

AUD/USD                                 

Market highlights from the past week

Tuesday September 29: risk appetite was more fragile on Tuesday with fresh concerns over global coronavirus developments.

Wednesday September 30: although there was a brief dip as equities faded, there was fresh support in Asia, with AUD/USD around 0.7180 for much of the session before advancing to near 0.7200.

Thursday October 1: the weaker risk tone and defensive US dollar support undermined the Australian currency on Friday, especially with commodity prices under pressure, with AUD/USD retreating to lows near 0.7130.

Friday September 2: President Trump was hospitalised after Friday’s market close with a high degree of uncertainty over political developments, but overall risk appetite held steady.

Monday September 5: risk appetite held firm on Monday with fresh hopes for US fiscal support and relief over President Trump’s condition.

AUD/USD price analysis

Let’s 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 0.6748 has been clearly broken. What was resistance is now support.

Weekly: We have a 261.8 per cent extension level at 0.7393 (from 0.5506-0.6220). We have completed a five-wave sequence. According to Elliott wave this should mean a three-wave correction lower is the next pattern.Daily: mixed trading for the last three days. The overnight rally has been sold into.

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Intraday four-hour: levels close to the 61.8 per cent pullback of 0.7216 (from 0.7345-0.7006) have found selling interest. We have posted an evening doji star pattern on the four-hour chart. This is negative for short-term sentiment.Outlook: there is scope for mild buying in morning trade but, with a topping formation, we look for this to be limited.

Possible trade set-up:

Action: selling at 0.7180

Stop: 0.7210 (overnight high)

Target: 0.7087 (swing high)

Potential return on risk to first target:  R3.1 (reward 93 / risk 30)

Australian Dollar / US Dollar
Daily change
0.67479
Low: 0.67277
High: 0.67762

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