AUD/USD has been in a bullish correction mode in November since marking a new low on the year at 0.8540. The market started this week with one more push higher, but stalled just below 0.88 before retreating sharply during the 11/17 session.
In the 4H chart, we first see a market that was bearish, but has been shifting in November as price moved above the 200-, 100-, and 50-period simple moving averages (SMAs), and as the 4H RSI has broken above 60 to show loss of bearish momentum.
However, since failing to break 0.88, price has retreated back in the cluster of SMAs, and the RSI has returned to neutral area. As price approaches the 0.8680 area, we should expect some support. Here we have the rising channel support, and previous support/resistance area, and the 50-period SMA. If price can hold above 0.8680, the pressure remains on the 0.88 handle, with risk of breaking higher. A break below 0.8680 would be an early warning of a bearish continuation attempt. We might want to also see price failing to push back above 0.8750, and able to break the 0.8650 pivot before being more confident about a bearish continuation scenario.
Now, if price does hold above 0.8680, and makes a move to 0.88, we have to again expect some sellers around 0.88.
(click to enlarge)
In the daily chart, we can see that there is the 50-day SMA at 0.88, which is around the middle of October’s range, so staying below it maintains a bearish bias. Also, if price holds below 0.88, the current break above the falling speedline from September would not be clear, and the market would not treat it as a bullish breakout.
Bullish Correction Mode: A break above 0.88 would open up a bullish correction scenario to at least 0.89, where we have common resistance from October’s consolidation. We should expect strong selling here especially if the daily RSI is back near 60 and stalls.
A break above 0.8915 would complete a price bottom, in which case, the market would shift to a neutral, maybe slightly bullish mode.
Bearish Mode: Otherwise, the market is still bearish, or at most neutral-bearish. Holding below 0.88 would keep the pressure toward the 0.8540 low on the year, with risk of pushing to 0.85 on the back of the prevailing downtrend.
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