Overview:– The pair has become has more convincing to sell as we can see that a steep downside momentum followed by a sharp breakout of support line, all this set up is just for short the pair as we know that in the downtrend market sell on highs will be profitable strategy. A massive bearish storm on the daily chart indicates that bears are leading in the game and playing at their front foot. The bears are dominating the bulls at every nook and corner, and the hope for further bearish sentiments is increasing by leaps and bounds.
Fundamental Analysis:- AUD/USD has been a head-scratcher following a series of better data of late, a discounted probability that the Reserve Bank of Australia will cut rates as soon as Feb 4th meeting and a series of supply without a glimpse of a correction, as of yet.
This leads to the presumption that a correction is in order and soon, especially considering that the price is now down to a critical level and a likely pool, changing hands in the liquidity of buys and sells stops which means it really is a battle of the bears and bulls at this juncture. One would presume, that given how deep the move has been, that the price is juggling between retail orders as well as large investor asset management as well as commercial positions.
Technical Analysis:- From technical prospective we can see that pair is receiving the supply pressure from the 50 EMA line which is providing us bearish signal and a recent bearish marabuzo candlesticks below all the major and minor EMA lines, which is providing us further bearish signal. Odds are in favor of bears and intraday bias remains bearish on the pair as long as 0.6850 level remains intact.
The 0.6700 level is the only stumble block for bulls, if bulls will clear this level then 0.6600 and 0.6500 will be like a cake walk journey for bears. Today’s closing matter a lot, if bears break the mentioned stumble block then we may see a new phase of bears run, on contrary if pair comes up above 0.6800 level then we may see reversal signal and pair may come back to north side.
A bearish crossover on the MACD crossover is verifying this downside move and RSI is also falling down below the 50 level which is providing us bearish signal.
What next:- Odds are in favor of bears. Intraday bias remains bearish on the pair as long as pair is sustaining below the 0.6800 level. The 0.6700 level is the key support level followed by 0.6650 level where as 0.6800 level is the key resistance level followed by 0.6850.
Trade idea:- Based on chart and studies above we can suggest that sell at 0.6745-50 target is 0.6700 and 0.6650 with the tight stop loss of 0.6800.
