AUD/USD Remains Bearish After the RBA Statement

0
187
AUD/USD Remains Bearish After the RBA Statement

The Reserve Bank of Australia (RBA) met and voted on monetary policy today (12/2). The RBA statement showed that economic expectations remain cautious and subdued, and that the Australian Dollar is still overvalued. There was not much difference from the previous monetary policy decision to hold the official cash rate at 2.50%.

Official RBA Press Release

The AUD/USD started the week lower, but bounced up from a new low on the year around 0.8416. After the RBA statement, the AUD/USD stalled at 0.8540 and is retreating. The 4H candlesticks are suggesting a reversal back to the downside, with the 0.8525 area in sight, and with risk of breaking lower to 0.84.

AUD/USD 4H Chart 12/2
audusd 4h chart 12/2
(click to enlarge)

Respecting Resistance: On the 4H chart, we can see that AUD/USD respected a previous resistance pivot and a falling speedline, while the RSI held below 50. These all suggest maintenance of the bearish outlook as well.

Bearish Continuation: Now, the USD has been cooling off a bit lately, so the AUD/USD’s decline is indeed an Aussie-story since mid-November. The AUD/USD is poised to continue its downtrend unless there is a rally above the 0.8615 resistance pivot and last week’s high, which would also clear above the falling trendline coming down from the 0.8795 November high.

Reversal scenario: In the scenario that price pulls back above 0.8615, there will be a challenge/resistance around 0.87, near the 200-period SMA in the 4H chart and another falling trendline coming down from October’s high. Below 0.87, price is neutral-bearish. But If price can start holding above 0.85 and push above this key 0.87 resistance, then we might have a bullish reversal at hand.

Target/Support: Going, back to the current mode, the downtrend, we have to take a look at the monthly chart to see what the next key support is.

AUD/USD Monthly Chart 12/2
audusd monthly
(click to enlarge)

The monthly chart shows a key support/resistance area: 0.7980-0.8080. This area involves the 2010 low, an a support/resistance pivot going back to 2005, and the key psychological level of 0.80.

We should also note that 0.7945 is the 61.8% retracement of the 2009-2011 uptrend. With the RSI approaching 30, we should watch this area around 0.80 as they next key support in the medium-term.

Previous Post by Author: EUR/USD Signals More Bullish Correction Ahead of ECB Risk

SHARE
Previous articleForex Video Briefing (12/1) – Trading the USD/CAD
Next articlePast Sins Continue to Haunt Bitcoin
Fan Yang has been a professional forex trader and analyst since 2007. He specializes in technical analysis and has a Chartered Market Technician designation since 2011. He was the chief technical strategist at CMSFX He was also the founder and chief currency strategist at FXTimes Over the years, Fan has not only been a trader and analyst but also an educator. As a proponent of both technical and fundamental analysis in trading, Fan advocates simplicity and discipline as key factors in making trading decisions when faced with so many "clues" and "signals". Currently Fan Yang is the chief currency analyst and webinar instructor at forexminute.com.