HKDAUD breaks below key technical support level
Hong Kong Dollar/Australian Dollar (HKDAUD) Technical Analysis Report for Jun 30, 2020 | by Techniquant Editorial Team
HKDAUD ended the month -3.41% lower at 0.1869 after losing 10 pips (-0.53%) today on low volume. Trading 9 pips higher after the open, the FX pair was unable to hold its gains as the bears took control ending the day below its opening price. Closing below Monday's low at 0.1872, the forex pair confirmed its breakout through the previous session low after trading up to 5 pips below it intraday.
Daily Candlestick Chart (HKDAUD as at Jun 30, 2020):
Tuesday's trading range has been 21 pips (1.12%), that's below the last trading month's daily average range of 27 pips. Weekly volatility is also lower, being slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently lower than usual for HKDAUD.
In a volatile session, prices traded above the prior day's high as well as below the previous day's low, forming a bearish Outside Bar.
After trading as low as 0.1867 during the day, the pair found support at the 20-day moving average at 0.1868. The last time this happened on March 31st, HKDAUD gained 1.00% on the following trading day. Prices broke below the key technical support level at 0.1870 (now R1), which is likely to act as resistance going forward. HKD/AUD ran into sellers again today around 0.1888 for the third trading day in a row after having found sellers at 0.1886 in the prior session and at 0.1886 two days ago.
The trend is clearly bearish, showing an intact downtrend in the short, medium and long-term.
Buying might accelerate should prices move above the close-by swing high at 0.1895 where further buy stops could get activated. With prices trading close to this year's low at 0.1826, downside momentum might speed up should the market break out to new lows for the year.
Among the 11 market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Price broke through Technical Support S1" stand out. While it is usually interpreted as bearish, it has actually shown to be bullish for HKD/AUD. Out of 368 times, HKDAUD closed higher 50.54% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the long side has been after 10 trading days, showing a win rate of 53.26% with an average market move of 0.28%.