Australian Dollar Forecast: AUD/USD Eyes a test of the Monthly Resistance

Australian Dollar Forecast:  AUD/USD Eyes a test of the Monthly Resistance

last week, AUD/USD corrected lower as it failed to break above the weekly resistance. Will bears take advantage and press the pair lower or will the market resume bullish price action?

AUD/USD Technical Outlook

· The price develops a continuation pattern

· AUD/USD may resume bullish price action

On November 17, AUD/USD failed to overtake the weekly resistance at 0.7338 then retreated after. Ultimately, a weekly candlestick closed modestly in the green with a 0.2% gain. Alongside that, the Relative Strength Index (RSI) fell from 65 to 60 indicating that bulls were losing momentum.

AUD/USD Daily Price Chart (August 24 – November 23, 2020)

Chart source, Webtrader, Capex.com

On November 3, AUD/USD broke above the sloping bearish trendline then climbed to the current 0.7200 – 0.7412 trading zone. Later on, the price developed a bullish rectangle pattern hence, a break above its upper line could send the price for a test of the high end of the zone at 0.7412 the monthly resistance).

A daily close above the high end of the zone may cause a rally towards the monthly resistance at 0.7525.

On the other hand, a close below the low end of the zone at the key psychological level 0.7200 may encourage bears to press AUDUSD even lower towards 0.7075.

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AUD/USD Four Hour Price Chart (November 1 – November 23, 2020)

Chart source, Webtrader, Capex.com

On November 12, AUD/USD broke below the bullish trendline that originated from the November 2 low at 0.6989 and started a sideways move creating a higher low with a lower high.

In conclusion, while the price trades without a clear direction a violation of the second bullish trendline originated from the November 2 low generates a bearish signal. Thus, a break below 0.7284 could send AUD/USD even lower towards the low end of the current trading zone discussed above on the daily chart at 0.7200. On the flip side, a break above 0.7441 may trigger a rally towards 0.7514. As such, the support and resistance levels underlined on the chart should be kept in focus.

The information presented herein is prepared by Mahmoud Alkudsi and does not intend to constitute Investment Advice. The information herein is provided as a general marketing communication for information purposes only.

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