Short-term technical outlook on AUD/USD (Tues 19 Feb)
click to enlarge charts
- Since its 03 Jan 2019 flash crash low of 0.6738, the AUD/USD has not made any significant up movement progress even though pair has continued to trade above the pull-back support of former primary descending channel resistance from 26 Jan 2018 high that has been broken out on 05 Nov 2018. The recent flash crash low of 0.6738 has managed to find support at the pull-back support of the former primary descending channel resistance (see 4-hour chart).
- Since the bullish breakout from the descending channel resistance on 05 Nov 2018, the price action of AUD/USD has traded sideways and its technical conditions have started to deteriorate. The recent swing high of 0.7295 printed on 31 Jan 2019 has stalled at a descending trendline resistance from 03 Dec 2018 high and made a failure bullish breakout above the previous swing high areas of 11/15 Jan 2019 as it reintegrated below 0.7200.
- The recent rebound from its 0.7055 minor swing low of 12 Feb 2019 has started to form a potential minor bearish reversal “Head & Shoulders” configuration with a bearish divergence signal seen in the 4-hour Stochastic oscillator at its extreme overbought level of 96 (see 4-hour chart).
- The exit target of the ‘Head & Shoulders” stands at 0.6825 which is also defined by the 1.382 Fibonacci expansion of the recent push down from 31 Jan 2019 high of 0.7295 to 12 Feb 2019 low of 0.7055 projected from yesterday, 18 Feb high of 0.7160 and the pull-back support of the former primary descending channel resistance from 26 Jam 2018 high (see 4-hour chart)
- The key short-term resistance stands at 0.7160/7170 which is defined by the descending trendline from 31 Jan 2019 high, the minor ascending range resistance from 12 Feb 2019 low and a Fibonacci retracement/expansion cluster.
Key Levels (1 to 3 days)
Intermediate resistance: 0.7145
Pivot (key resistance): 0.7160/7170
Supports: 0.7105, 0.7060/7040 & 0.6920
Next resistance: 0.7200
If the 0.7160/7170 key short-term pivotal resistance is not surpassed, the AUD/USD is likely to see a further potential push down to test 0.7105 (minor ascending range support from 12 Feb 2019 low) follow by the 0.7060/40 neckline support of minor “Head & Shoulders” configuration in form since 11 Jan 2019. A break below 0.7040 shall trigger the bearish breakdown to target the 03 Jan 2019 flash crash swing low area (exclude the spiked down) of 0.6920 in the first step.
On the other hand, a break above 0.7170 negates the bearish tone for a push up to retest 0.7200 (also the 61.8% Fibonacci retracement of the recent slide from 31 Jan 2019 high to 12 Feb 2019 low).
Charts are from eSignal
GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.