AUD/USD drops below rising channel
On Friday 10th February, AUD/USD dropped 150 points to close below the lower band of a rising channel from January’s low. After breaking to a fresh six-month high at 1.0845 on February 8th, the pair declined to 1.0640, edging closer to test the 20-day moving average now at 1.0627.
Price action opened this week almost 50 pips higher, but today’s high has so far stalled at the lower boundary of the rising channel, now turned resistance around 1.0775, suggesting a top has been established at last week’s high. Also supporting a temporary end to the recent bullish move is bearish divergence present on the Commodity Channel index on the daily chart. We will wait for a break and close below the 20-day moving average to confirm a pause in the bullish structure, while a break below the 200 and 50-day moving averages, now at 1.0409 and 1.0357 respectively is needed to open a new bearish structure. A move above the bottom of the rising channel line will likely resume the bullish move to test the recent high, at 1.0845.
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