AUDUSD technical outlook for the month of August 2016

The medium-term uptrend in the daily chart is advancing towards the critical resistance level which will help the trader to identify the potential bottom of the AUDUSD pair. Professional traders are keenly waiting for the market and playing on the sideline keeping the key resistance level 0.7800 level in mind. If the pair manages to break this level then we might see some strong bullish momentum in this pair which will ultimately challenge the long-term favoring down trend of the pair. This week is very much critical for the pair since the upcoming FOMC is going to make the decision whiter the pair will breach the critical resistance level or not.

The massive cluster formed at the weekly chart of the pair suggests that price will have the great level of difficulty in overcoming 0.78150 levels. However, the price generally rallies lies rocket if they manage to breach the critical resistance level. On the contrary, if there is a downward move of the pair the first downfall of the pair will be limited by the strong support level of 0.74000 level. But anything below the 0.74000 level marks of the pair is a strong bearish indication of the pair.

Let’s see the weekly chart in the AUDUSD pair.


Figure: Trading the AUDUSD pair in the weekly chart

The long-term downtrend line is still intact and currently, the price is testing it with strong bullish momentum. With the strong economic growth of economic c condition of the Aussie Dollar, there is good chance that the long term down trend line will be the breach in this pair. Though the scenario is strongly bullish fundamentally and in daily technical analysis but in the weekly and monthly time frame it stills remains strongly bearish. In the eyes of trained professional there might be the initial breaching of the long-term downtrend line of the AUDUSD pair but ultimately they stay with the bears.

The price action signal on the weekly chart remains promising since a bearish hanging man is followed by the bearish pin bar. But the macroeconomics of the Aussie dollar is ignoring the technical terms and trying to print a higher high in the chart. Even after breaching the long term down trend traders expect the price to fall until and unless the market  overcome the high of  10th may 2015.The 0.81600 level is going to provide the significant amount of resistance to the AUDUSD pair which might turn the motion of the pair in the downward direction again.

The RBA statement in the last week created the mass confusion in the AUDUSD pair which ultimately converted the pair into the Bulls market. This event helped the pair to gain 77 cent gain which triggered the testing of the key resistance level of the pair. Despite all the effort of the Australian government, the Aussie pairs tend to be bearish due to the AAA credit situation of this pair. Before the major release of the FOMC statement, the pair will trade within a tight range of 0.7728 – 0.75955 levels. In the daily chart, the AUDUSD price has formed a narrow step ascending channel and technical parameters suggest that the pair will find a significant amount of resistance in the channel top as it proceeds. The gain of the AUDUSD pair might eventually fade out in this week with the Hawkish statement of the FED. Most of the traders are waiting for the major decision of the central bank to enter the market with a clear overview. But many traders are overlain concern about the long-term significant down trend which might create the bearish scenario of the market even after a dovish statement from the FED.

The initial bullish target of this pair is 0.81627 resistance level which will offer a significant amount of resistance to this pair. If the pair manages to breach that level with daily closing above the 0.8267 level then the next potential stop for this pair is 0.85920.The second level is almost 1000 pips above the current price level and price trading at that level is definitely the clear signal of the end of the long-term bearish trend in the AUDUSD pair.

The first bearish target of this pair is 0.74200 levels, low of 24th July 2016.There might be a decent bounce in AUDUSD pair from that level however such initial decisive move is most likely to take out the primary support level of this pair. Anything below the 0.74000 mark will bring a deep downward rally in the pair towards the 0.71500 level. This level is going to play a crucial role in the direction of the trend in AUDUSD pair since the price has respected this level many times in the past days. With the clear break of the 0.71500 level, the market will find fresh new sellers which will eventually lead the pair to its previous downward momentum. Anything below the 0.7000 level marks of the pair is strongly bearish and is in favor of the long-term prevailing trend. Trading against the long-term prevailing trend is very risky and many traders have to wipe their entire account while trading the reversal of the trendy AUDUSD pair. Actions should be taken cautiously based on both technical and fundamental analysis.

The long-term bearish trend in the AUDUSD pair is at risk with price trading to weekly downtrend line resistance. Though the trend line is breached on several occasions.However, the price has eventually managed to stay low .The current price action scenario and fundamental factors strongly suggest that there is high chance of bullish breakout which might be a fake out since 90% of the time long term prevailing trend wins. Keeping the key support and resistance level in mind the AUDUSD pair offers nothing but the risk at the current situation. The upcoming FOMC meeting minute might reveal true technical parameters which will help the traders to trade this pair well within in their risk limit. But acting prematurely at such risk level will definitely cost. So, it’s better to stay on the sideline until more lucrative trading opportunity present itself in the market.

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