Navigating the AUDUSD Price Action

The recent performance of the AUDUSD currency pair has been marked by significant fluctuations driven by a series of economic events, market sentiment, technical indicators, and chart patterns. Since mid-July, the pair has experienced a strong downward trend, interrupted by brief attempts at recovery. Traders are expected to closely monitor the currency pair in light of the forthcoming release of significant economic data that could potentially impact currency valuations.

Wednesday 17:30 (GMT+3) – USA: EIA Crude Oil Stocks Change (USD)

Thursday 15:30 (GMT+3) – USA: GDP q/q (USD)

Thursday 15:30 (GMT+3) – USA: Unemployment Claims (USD)

Friday 02:50 am (GMT+3) – Japan: Retail Sales m/m (JPY)

Friday 04:30 am (GMT+3) – Australia: Retail Sales m/m (AUD)

Friday 09:45 am (GMT+3) – France: GDP q/q (EUR)

Friday 15:30 (GMT+3) – Canada: GDP m/m (CAD)

Friday 16:30 (GMT+3) – USA: Core PCE Price Index m/m (USD)

Saturday 04:00 am (GMT+3): China: Manufacturing PMI (CNY)

The AUDUSD has followed a downward trend since July 17, when it peaked at 0.455452. This downward movement was signaled by several Japanese candlestick reversal formations followed by a chart pattern known in technical analysis as a failure swing. Specifically, the peak at 0.449288 failed to surpass the previous peak, and subsequently, prices dropped below the trough at 0.413209, hence a failure swing. The exchange rate fell below the 20 and 50-period Exponential Moving Averages (EMA), creating a series of lower lows and lower highs, which intensified the downward momentum, bringing the AUDUSD exchange rate down to 0.272160 on August 5. After that, prices bounced back from the lows in an attempt to form an upward correction and a potential reversal. The formation of a bullish failure swing encouraged the bulls to enter the market, pulling the AUDUSD price to 0.400561. The Momentum oscillator indicates a bullish outlook, registering values above the 100 baseline. However, the two EMAs and the Relative Strength Index (RSI) send different signals. In particular, prices are still below the 20 and 50-period EMAs, and the RSI records values below 50, indicating a downtrend.

Should the buyers take market control, traders may direct their attention toward the four potential resistance levels below:

0.374577: The first price target is identified at 0.374577, reflecting the weekly (PP) Pivot Point calculated using the standard Pivot Points method.

0.400561: The second target is seen at 0.400561, corresponding to the peak marked on August 24.

0.410232: The third price target is determined at 0.410232, which corresponds to the 261.8% Fibonacci Extension drawn from the swing high of 0.355713 to the swing low of 0.319530.

0.422299: An additional resistance is seen at 0.422299, aligning with the (R1) resistance calculated using the weekly Pivot Points method.

Should the sellers keep market control, traders may consider the four potential support levels listed below:

0.340077: The primary downside target is identified at 0.340077, corresponding to the daily low formed on August 28.

0.319530: The second support level is 0.319530, representing the swing low marked on August 15.

0.300871: The third support line is established at 0.300871, representing the (S2) support calculated using the weekly standard Pivot Points method.

0.272160: An additional downward target is observed at 0.272160, corresponding to the daily low marked on August 5.

In conclusion, the recent fluctuations in the AUDUSD currency pair highlight the critical role of chart analysis in navigating market trends. The downtrend observed since mid-July, characterized by key chart patterns and technical indicators, has set the stage for potential resistance and support levels that traders should closely watch. As the market continues to respond to these signals, understanding the interplay between these factors will be essential for making informed trading decisions.