AUDUSD Technical Update – March 5th – Price Action Analysis
- The RBA (Reserve Bank of Australia) has held the benchmark interest rate at 3%, a half-century low, and the Australian dollar has gained broadly.
- The AUD/USD made a bearish breakout yesterday, but subsequently pared back earlier losses to close the day as a hammer candle/pinbar on the daily chart, potentially trapping shorts.
- The last time the AUD/USD printed a similar – albeit inverse – price action setup (which was likewise countertrend) was on the 14th September and this essentially marked the highest point since that date (see D1 chart below).
- Price is currently consolidating around the 1.0230 mark, an area coinciding with the 12/2/13 and 21/2/13 daily lows.
- The AUD/USD pair has today covered 59 pips, 100% of the ADR (60 day average daily range). Yesterday had the pair covering 91 pips on increased volatility, this can be seen with the extended lower shadow on Monday’s candle.
- The USDX (dollar index) has seen an extension of the decline from yesterday and is trading around the 82.00 handle – a retest of the recently passed 61.8% Fibonacci level.
- The US dollar has seen broad strength over recent trading with positive sentiment towards the greenback gaining traction and associated safe haven flows. The risk remains for a continuation of the dollar strength scenario if AUD/USD 1.0170 area support gives way.
Nick Simpson, Forex-FX-4X.com