Chart Of The Day - AUD/USD may see a snap-back rally

Short-term technical outlook on AUD/USD

Key technical elements

  • The recent 2 weeks of decline from its 0.8135 high printed on 27 Jan 2018 has almost reached a medium-term support of 0.7800 (printed a current intraday low of 0.7808 in today, 08 Feb Asian session).
  • The 0.7800 medium-term support is defined by a confluence of elements. The former medium-term swing high area of Apr 2016, the minor swing low of 09 Jan 2018 and a Fibonacci cluster (50% Fibonacci retracement of the 3-month up move from 08 Dec 2017 low to 27 Jan 2018 high & the 1.618 Fibonacci projection of the recent decline from 27 Jan 2018 high to the 01 Feb 2018 minor low projected from 02 Feb 2018 minor high).
  • The recent decline seen in the daily RSI oscillator has stalled at a corresponding support at the 37% coupled with the bullish divergence signal seen in shorter-term hourly RSI oscillator. These observations suggest a slow-down in the recent downside momentum of price action where a “snap –back” rally may materialise at this juncture.
  • The significant near-term resistances stands at 0.7875 (minor descending trendline from 31 Jan 2018 high) follow by 7930/7950 (former minor swing low areas of 16/23 Jan 2018 + 38.2% Fibonacci retracement of the recent decline from 27 Jan 2018 to today, 08 Feb 2018 Asian session intraday low.

Key levels (1 to 3 days)

Pivot (key support): 0.7800

Resistances: 0.7875, 0.7930/50 & 0.8000/8020

Next support: 0.7745/30


Therefore as long as the 0.7800 pivotal support holds and a break above 0.7875,  the AUD/USD is likely to shape a potential “snap-back” rally to target the 0.7930/50 resistance. A break above 0.7930/50 opens up an extension towards 0.8000/8020 next.

On the other hand, failure to hold above 0.7800 should invalidate the short-term “snap-back” rally scenario for an extension of the decline to test the next support at 0.7745/30 (61.8% Fibonacci retracement of the up move from 08 Dec 2017 low to 27 Jan 2018 high & the former swing high areas of 22 Feb/17 Mar 2017).

Charts are from eSignal

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