HKDAUD breaks below key technical support level
Hong Kong Dollar/Australian Dollar (HKDAUD) Technical Analysis Report for May 29, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, HKDAUD ended the month -2.32% lower at 0.1935 after losing 8 pips (-0.41%) today on high volume. Today's close at 0.1935 marks the lowest recorded closing price since February 19th. Trading 7 pips higher after the open, the market was unable to hold its gains as the bears took control ending the day below its opening price. Closing within the prior day's range, prices failed to decisively move beyond the previous day's trading range.
Daily Candlestick Chart (HKDAUD as at May 29, 2020):
Friday's trading range has been 21 pips (1.08%), that's slightly below the last trading month's daily average range of 25 pips. Weekly volatility is also lower, being slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for HKDAUD.
One bullish candlestick pattern matches today's price action, the Bullish Hikkake Pattern.
After trading as low as 0.1930 during the day, the forex pair found support at the 200-day moving average at 0.1931. Prices broke below the key technical support level at 0.1936 (now R1), which is likely to act as resistance going forward. The last time this happened on Tuesday, HKDAUD actually gained 0.46% on the following trading day. The currency was bought again around 0.1930 after having seen lows at 0.1934, 0.1931 and 0.1932 in the last three trading sessions. Obviously there is something going on at that level.
While still in a long-term uptrend, the short and medium-term trends both turned bearish already.
Trading close to March's low at 0.1925 we might see further downside momentum if potential sell stops at the level get activated.
Among the eight market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Low close to prior three Lows" stand out. Although it is usually interpreted as bullish, it has actually shown to be bearish for HKD/AUD. Out of 36 times, HKDAUD closed lower 55.56% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the short side has been after 10 trading days, showing a win rate of 66.67% with an average market move of -0.04%.