A look at AUD/USD technicals

The pair failed to re-take the former uptrend on June 12 and is now reverting to the mean - 20-day moving average - after closing two standard deviations from this average.

Source: Bloomberg

This puts the 20-day average in play at 0.9313 and judging by the fact it is starting to turn higher we could see buyers here. The 20-day seems to be important now for the bulls.

A break of the 20-day could see the lower Bollinger being tested in the short-term, which also happens to converge with the 200-day MA and series of lows through May. Stochastics have broken through the 20 level (although could still give a failed signal), so I am watching this oscillator as it could indicate a deeper sell-off.

In a sideways trading market, Bollinger bands are generally excellent ways of playing this market condition.

I suggested potentially buying AUD/USD last week at 0.9350 (the 38.2% retracement of the recent rally), but price has breezed through this level, so I have closed the positions (given the failure of any bounce). I will look to see if the pair finds buyers at the 20-day, otherwise there are signs the pair could head to the lower Bollinger.

The break higher in US yields seems be getting the USD bulls fairly excited.

Click to enlarge

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.

Find articles by analysts

Find out more about