Technical Analysis

AUDUSD trading ranges is confined

The Reserve Bank of Australia raised rates by 50 basis points yesterday. That was higher than the expected 25 – 40 basis point hike (depending upon the analysts).

The price spiked higher after the news reached 0.7245, but quickly rotated back to the downside and in the process broke back below 100 hour and 200 hour moving averages (blue and green lines in the chart above).

After bottoming at 0.7156, the price shot back to the upside and closed above the 100 hour moving average and just above the 100 day moving average at 0.72159 and 0.7229 respectively. The price stayed below the higher 200 day moving average at 0.72545 (the high price reached 0.7240 yesterday) and the spike high from after the rate hike.

In trading today, a rotation back to the downside took the price back below the aforementioned 100 and 200 hour moving averages, but the low stalled ahead of the lows from yesterday and just ahead of a upward sloping trendline as well. The price moved back higher above the hourly moving averages but stalled just short of the 100 day moving average this time.

Since the rate hike, the highs have not been able to reach the initial spike high at 0.7245. Today’s swing highs on the hourly chart have been progressively lower as well with the 100 day moving average stalling the rally on the last push higher.

Having said that, the downside has been limited as well. A trendline on the downside currently cuts across at 0.7178 and moving higher. Move below that trend line level should increase the bearish bias with the swing lows from yesterday and last week at 0.7156 and 0.71399 as the next downside targets to get to and through. The 38.2% retracement of the move up from the May 12 low comes in at 0.7109 and would be a another target if the sellers are to take more control.

On the topside, getting above the 100 day moving average and staying above that moving average would have traders targeting the 200 day moving average at 0.72545. Last week, the price moved above that moving average on Thursday and Friday, but could not sustain momentum above that level. Moving above again should increase upside momentum and moved the price away from the cluster of moving averages and trendlines currently keeping the pair in its clutches.

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