USDAUD stuck within tight trading range
US Dollar/Australian Dollar (USDAUD) Technical Analysis Report for Jul 03, 2020 | by Techniquant Editorial Team
Moving lower for the 5th day in a row, USDAUD ended the week -1.1% lower at 1.4407 after losing 29 pips (-0.2%) today on low volume. Today's close at 1.4407 marks the lowest recorded closing price since June 10th. Closing within the previous day's range, prices failed to decisively move beyond the prior day's trading range in a lackluster session.
Daily Candlestick Chart (USDAUD as at Jul 03, 2020):
Friday's trading range has been 77 pips (0.53%), that's far below the last trading month's daily average range of 193 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 USDAUD. Prices continued to consolidate within a tight trading range between 1.4384 and 1.4541 where it has been caught now for the last three trading days.
During the whole day, prices traded within the previous day's range, unable to trade above the prior day's high or below the previous day's low forming an Inside Bar. Additionally, two candlestick patterns are matching today's price action, the Bearish Short Candle and the Black Candle which are both known as bearish patterns. The last time a Bearish Short Candle showed up on June 8th, USDAUD actually gained 0.86% on the following trading day.
Prices are trading close to the key technical resistance level at 1.4503 (R1). The market found buyers again today around 1.4386 for the third trading day in a row after having found demand at 1.4384 in the prior session and at 1.4403 two days ago.
The trend is clearly bearish, showing an intact downtrend in the short, medium and long-term.
Selling might accelerate should prices move below the close-by swing low at 1.4384 where further sell stops could get triggered. With prices trading close to this year's low at 1.4156, downside momentum might speed up should the FX pair break out to new lows for the year.
Among the six market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Low close to previous two Lows" stand out. While it is usually interpreted as bullish, it has actually shown to be bearish for USD/AUD. Out of 141 times, USDAUD closed lower 53.90% 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 58.16% with an average market move of -0.03%.