0.70 – buy-the-dip scenario?

2020年6月8日

AUD/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

May’s extension and June’s impressive early rally has, as you can see, placed monthly price around the upper limit of supply at 0.7029/0.6664. What’s also notable here is within the supply area’s walls a long-term trendline resistance (1.0582) was recently penetrated, suggesting buyers may be taking control of things here.

Regarding the market’s primary trend, a series of lower lows and lower highs have been present since mid-2011.

Daily timeframe:

Thanks to Monday’s 0.7% rally, AUD/USD crossed paths with trendline resistance (0.6671) and came within a few pips of bringing in supply from 0.7059/0.7031.

Indicator-based traders will note the RSI oscillator is heading into strongly overbought territory. It may also interest traders to note the 200-day simple moving average at 0.6660 is in the process of flattening following months of drifting lower.

H4 timeframe:

Supply from 0.7003/0.6983, although knocking some wind out of the Aussie’s upside attempt Friday, ceded ground on Monday. This implies 0.7003/0.6983 may serve as demand going forward and 0.7046/0.7036 could enter as supply today.

H1 timeframe:

A drop in the US dollar index Monday elevated the Australian dollar, kicking H1 candles through the widely watched 0.70 level.

Upside momentum is mildly subsiding into early Asia today, welcoming the possibility of a retest at 0.70. Technical studies note additional support resides around this region by way of two local trendline supports (0.6882/0.7012), perhaps pulling for 0.7050 assuming a successful retest.

RSI action has remained healthy above its 50.00 region since late May.

Structures of Interest:

Monthly supply at 0.7029/0.6664 remains in the fight, though the break of the associated trendline resistance indicates possible bullish follow-through. Lower on the curve, nonetheless, shows daily price gripping trendline resistance, located a few pips under supply at 0.7059/0.7031, which could, given a daily close under support at 0.6931, witness sellers re-enter the frame.

Despite the higher timeframes connecting with resistances, the lower-timeframes present the idea of further buying occurring today. A buy-the-dip scenario off 0.70 may see buyers make a run for H4 supply nearby at 0.7046/0.7036, and 0.7050 on the H1 timeframe.