AUDUSD trends lower
On Friday, I wrote about the overbought condition of the AUDUSD (“AUDUSD shows a crack in the bullish move…maybe“). On that day, the price fell below the top side channel trendline (that trendline was broken to the upside on Thursday of last week), tilting the bias lower. The RSI on the daily chart was in overbought conditions. If the price could stay below the topside trend line on the chart above, the price could correct lower with the sellers more in control.
During yesterday’s trading, the price continued to drift to the downside, in what was up and down trading. The buyers and sellers battled but the price did move lower for the 2nd consecutive day.
Today, the progression to the downside continued with more momentum after the price fell below the lower channel trendline, the rising 100-hour moving average (blue line in the chart above), and the high from last Wednesday, and the low from yesterday. All those levels came in near 0.6837.
Ultimately, the price today moved below the rising 200-hour moving average (green line in the chart above) at 0.67912. That increased the bearish bias in the short term even more.
The 200-hour moving average is now the barometer for buyers and sellers. Stay below is more bearish. Move above and there could be some further upside probing after the disappointment from the break. The last time the price of the AUDUSD traded above the 200-hour moving average was back on June 1. That increases the break’s importance.
On the downside, the 0.6750 area is the next target level. Below that and traders will target the 38.2% retracement of the move up from the May 31 low. That level comes in at 0.67306. The 100-day moving average is near that level at 0.67221.
I would expect that traders would use that area near 0.6722 to 0.6730 as a key downside barometer. Getting below the 38.2% retracement and 100-day moving average would shift the bias more to the downside.
It took a few days but the cracks in the AUDUSD chart on Friday have helped turn buyers into sellers. There is more work to do at the 38.2% retracement/100-day moving average, but the market is more neutral below the 200-hour moving average.
For a video look at the pair, click on the video below.