AUD/USD: Below 0.90 After 0.904 Rejection

No major news from Australia nor China today, but that didn’t stop AUD/USD from climbing from a low of 0.900 to a high of 0.904 during the Asian session. The move appears to be technically driven with prices being pushed higher by the ascending trendline. Price however wasn’t able to breach the 0.904 support turned resistance despite testing it on 2 separate occasions, with bears sending price below where we started this morning on the 2nd rejection.

Hourly Chart
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Currently we’re trading below not just the rising trendline but also the incumbent Kumo. Bulls are retesting Senkou Span A after finding temporary support via 0.899. However, if Senkou Span A holds, the Kumo bearish breakout would be confirmed and we could see prices easily move back towards this week’s swing low of 0.894. The only solace bulls can find would be the fact that Stochastic readings are flattening out now, suggesting that a trough may be formed soon. However, stoch readings themselves isn’t within the Oversold region currently, and hence does not really invalidate a move towards 0.894. At the very best, all this suggest is that price may find support around 0.894 and rebound from there instead.

Daily Chart
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Daily Chart shows the importance of 0.904 which was the structural support for price action back in early – mid July, a break of which opens up further bearish targets closer to 0.885, which is the lows of 2013. Stochastic readings on the daily chart looks similar to the ones found on the Hourly – readings flattening out and nearing the Oversold region, which favors the scenario of price finding support around 0.885. However this does not necessary mean that a long-term bullish recovery is in the cards, as the strong overarching bearish sentiment will still be able to ignore any contraion signals and push prices lower.

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