Overview:– Since last 3 consecutive days bulls rolled up and converted all the bearish sentiments into bullish sentiments. The current picture depicts that bulls are doing their best and heading towards north side without any pressure and they are leading in the game and dominating the bears at every nook and corner.
AUD/USD pair has made a fantastic downfall from 0.7000 level to 0.6434 level, which is a fabulous selloff or blood bath since last week of December 2019. Well the pair was making successively lower lows and lower highs and falling down by taking the supply pressure from downtrend line.
But now it seems like bulls knocking the door at an initial level. We are expecting a strong counter attack from bull’s campaign. 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 demand pressure from 161.8% Fibonacci extension level. which is providing us bullish signal and a recent candle is piercing pattern which is providing us trend reversal signal. Well it’s an early call but we will get further confirmation of the trend once we see a daily closing above 0.6600 level in today or tomorrow.
This week’s closing matters a lot which will decide the direction for upcoming week. Odds are in favor of bulls and intraday bias remains bullish on the pair. as long as 0.6850 level remains intact.
The 0.6600 level will be the first sign of bullishness and then a daily closing above this level will open the way towards the 0.6700 and 0.6800 level. An oversold territory of RSI is also providing us trend reversal signal and a bullish crossover on the MACD indicator is also providing us bullish signal.
What next:- The 0.6500 level is the key support level followed by 0.6450 level where as 0.6700 level is the key resistance level followed by 0.6750.
Trade idea:- Based on chart and studies above we can suggest that buy at 0.6620 target is 0.6700 and 0.6800 with the tight stop loss of 0.6460.
