The Aussie dollar continues to remain weak following the surprise cut in interest rates by the RBA which gave additional momentum to the move lower. The writing was already on the wall for the AUD/USD given the series of pivots on the daily chart, all of which were posting lower highs and giving a clear signal to forex traders, that a change in trend was imminent. This duly arrived on Tuesday with a wide spread down bar and a change in the daily trend dot to red, moving out of the congestion phase and into bearish sentiment.
This break lower has also coincided with a change in our trading indicator which has now transitioned from bullish to bearish. The sideways price action and subsequent move lower has also been supported by heavy selling volumes, occasionally punctuated with buying volume, as with yesterday’s minor rally, and the key platform of support has now been created in the 1.0164 region on the daily chart where prices paused early in September. If this is breached then we can expect to see the pair continue lower and extend the current bearish momentum further, with a subsequent move to test parity in due course.
By Anna Coulling