Thursday, July 30, 2020

Bearish Divergence On AUDUSD

Marco Tosoni

FХ Strategist & Financial Commentator

After setting a bottom around the half of March nearby 0.5500 area, the Australian dollar has regained some relative strength, with a strong bullish rally that brought this pair back towards 0.7200 area nearby the resistance zone set between February and April 2019, before the last bearish cycle that it lasts almost one year.

During yesterday’s session, we also had a new yearly top around 0.7200 with a daily closure on top, while on the first part of today’s session a first technical correction is going on with the quotes that are currently approaching the bottom area set on yesterday.

The Average True Range on his hand is still declining even though its value is still higher than the 2019 ones, so this pair is still active and this element should offer promising trading signals during the next trading session.

Looking at the RSI indicator, we can detect a perfect bearish divergence, that in combination with the strong resistance area around 0.7200 should anticipate a technical correction for the US dollar, at least with a short-term outlook.

The setup would be activated in case of a breakdown of yesterday’s bottom around 0.7140 area. The stop loss must be placed at 0.7240 above the weekly top, while the target price can be expected at 0.7040 around the previous top set in the beginning of June.

As always I recommend to trade carefully and to plan at best every move. Don’t forget to subscribe to NBHM YouTube Channel to stay up to date with the financial markets! Have a good trading and see you for the next video.

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