AUD/USD Tests Falling Channel's Support
Ali Mortazavi | Jul 12, 2022 07:59AM ET
Since risk-off sentiment and recession fears have intensified, commodity currencies like the AUD have come under more significant pressure. The safe-haven dollar is strengthening after hitting its 20-year high. Let's say commodity prices continue to fall due to weaker demand. In such a scenario, it may be gloomy for the Australian dollar against the US dollar.
AUD/USD on the four-hour chart is trading right below the 50-EMA within a descending channel. As the channel line holds the resistance, extensive selling pressure has dragged the price down, breaking below the lowest level since May 2020 at 0.67605.
Currently, the pair is hanging out with the channel's support line. However, the shortening bodies of the candles imply a diminishing bearish bias near this crucial support level. If this hurdle remains intact, AUD buyers may attempt to ride towards the broken support at 0.67605. Should fundamentals come in favor of Aussie bulls, they may make their way towards the 50-EMA, which lines up with the channel's upper band. On the other hand, a continued bearish bias can keep the pair along with the channel's support and allow it to step lower to 0.66900 and 0.66749.
Short-term momentum oscillators reflect easing bearish pressure. RSI is on the verge of the oversold area. In the event of further declines, there is a possibility that sellers will soon be exhausted. With waning pressure, momentum oscillates north in the selling area. As seen by both the RSI and the Momentum during the last two weeks, there has been a divergence between the oscillators and the price since they posted higher lows against the lower price bottoms.
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.