AUD/USD Chartpack - Technicals & Trade Setup
AUD/USD bears shrug-off hammer formation after breaching neckline of double top – Snap rallies to trade boundary strikes:
Although AUDUSD has been bouncing back this week, the current prices are still below 7DMA levels.
The pair earlier forms hanging man and hammer patterns at 0.7428 and 0.7238 levels respectively. The failure swings at the stiff resistance at 0.7381 and 0.7454 and steep slumps were observed in the recent past.
Hanging man at stiff resistance plummets prices below DMAs, while hammer counters with sharp rallies but for now, the trend seems to be slightly edgy as leading indicators signal shrinking momentum (refer daily plotting).
As a result, if you are seeing some consolidation around 0.7200 ahead of the RBA decision this afternoon, these rallies should not be considered as long opportunities.
AUDUSD in medium term perspective: The intermediate trend has been extending double top formation with breach below neckline and head towards 1 and a half year lows (refer monthly plotting), bearish engulfing candle followed by shooting star patterns plummet prices below 7EMA again on this timeframe. In this journey, the pair shrugs off hammer pattern candle as bears extend price slumps.
Both RSI and stochastic curves have constantly been showing downward convergence to signal bearish momentum. While we see bearish DMA & EMA crossover with rising volumes with dipping prices, this indicates downtrend to prolong further.
The Aussie’s mid-August slide to 0.72 on Turkey-inspired global risk aversion still left it quite fragile.
Still, AUD risks probably remain to the downside in September (0.70 handle), given the confluence of FOMC meeting, US review of China tariffs and EUR/Italy budget risks.
Trade tips: On trading perspective, at spot reference: 0.7229 levels, using momentary rallies it is advisable to buy upper striking options at 0.7270 and lower short lower strikes at 0.7212 levels, the strategy is likely to fetch leveraged yields as long as underlying spot FX remains between these two strikes on the expiration.
Alternatively, on hedging grounds, we advocate shorting futures contracts of mid-month tenors as the underlying spot FX likely to target southwards below 0.7150 levels in the medium run.
Writers in a futures contract are expected to maintain margins in order to open and maintain a short futures position.
Currency Strength Index: FxWirePro's hourly AUD spot index is inching towards 71 levels which is bullish), while hourly USD spot index was at 21 (mildly bullish) while articulating (at 05:57 GMT).
Although AUDUSD has been bouncing back this week, the current prices are still below 7DMA levels.
The pair earlier forms hanging man and hammer patterns at 0.7428 and 0.7238 levels respectively. The failure swings at the stiff resistance at 0.7381 and 0.7454 and steep slumps were observed in the recent past.
Hanging man at stiff resistance plummets prices below DMAs, while hammer counters with sharp rallies but for now, the trend seems to be slightly edgy as leading indicators signal shrinking momentum (refer daily plotting).
As a result, if you are seeing some consolidation around 0.7200 ahead of the RBA decision this afternoon, these rallies should not be considered as long opportunities.
AUDUSD in medium term perspective: The intermediate trend has been extending double top formation with breach below neckline and head towards 1 and a half year lows (refer monthly plotting), bearish engulfing candle followed by shooting star patterns plummet prices below 7EMA again on this timeframe. In this journey, the pair shrugs off hammer pattern candle as bears extend price slumps.
Both RSI and stochastic curves have constantly been showing downward convergence to signal bearish momentum. While we see bearish DMA & EMA crossover with rising volumes with dipping prices, this indicates downtrend to prolong further.
The Aussie’s mid-August slide to 0.72 on Turkey-inspired global risk aversion still left it quite fragile.
Still, AUD risks probably remain to the downside in September (0.70 handle), given the confluence of FOMC meeting, US review of China tariffs and EUR/Italy budget risks.
Trade tips: On trading perspective, at spot reference: 0.7229 levels, using momentary rallies it is advisable to buy upper striking options at 0.7270 and lower short lower strikes at 0.7212 levels, the strategy is likely to fetch leveraged yields as long as underlying spot FX remains between these two strikes on the expiration.
Alternatively, on hedging grounds, we advocate shorting futures contracts of mid-month tenors as the underlying spot FX likely to target southwards below 0.7150 levels in the medium run.
Writers in a futures contract are expected to maintain margins in order to open and maintain a short futures position.
Currency Strength Index: FxWirePro's hourly AUD spot index is inching towards 71 levels which is bullish), while hourly USD spot index was at 21 (mildly bullish) while articulating (at 05:57 GMT).