Chart of the day - AUD/USD at key inflection zone for another upleg of mean reversion rebound

Watch the key support at 0.7400/7380 on AUD/USD.

Short-term technical outlook on AUD/USD (Wed 11 Jul) 

 


Key technical elements

  • Since its low of 0.7308 printed on 02 Jul 2018, the AUD/USD has staged the expected bullish breakout from its minor bullish “Descending Wedge” configuration and met the mean reversion target/resistance of 0.7450 as per highlighted in our previous report dated 03 Jul 2018  (click here for a recap).
  • The pair has staged a pull-back from its recent 09 Jul 2018 high of 0.7484 and it is now resting a key short-term support of 0.7400/7380.
  • The aforementioned key short-term support of 0.740/7380 is defined by a confluence of elements; the former minor range resistance from 29 Jun/05 Jul 2018, the lower boundary of a minor ascending channel in place since 02 Jul 2018 low and a Fibonacci retracement/projection cluster.
  • The hourly Stochastic oscillator has traced out a bullish divergence signal at its oversold region which suggests that the recent pull-back from its 0.7484 high has lose downside momentum.
  • The next significant short-term resistance stands at 0.7540 which is defined by the upper boundary of the medium-term descending channel from 26 Jan 2018, 38.2% Fibonacci retracement of the decline from 14 Mar 2018 high to 02 Jul 2018 low and the upper boundary of the minor ascending channel from 02 Jul 2018 (see daily & 1 hour chart).

Key Levels (1 to 3 days)

Pivot (key support): 0.7400/7380

Resistances: 0.7440, 07484 & 0.7540

Next support: 0.7330/7300

Conclusion

Therefore, as long as the 0.7400/7380 pivotal support holds and a break above 0.7440 (an hourly close above it) may see another potential fresh upleg of the minor mean reversion phase to retest 0.7484 before targeting the 0.7540 resistance.

However, failure to hold above 0.7380 invalidates the mean reversion rebound scenario for the continuation of the medium-term down move to retest the 02 Jul 2018 swing low area of 0.7330/7300 in the first step.

Charts are from eSignal

 



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