USDAUD closes below its opening price unable to hold early session gains
US Dollar/Australian Dollar (USDAUD) Technical Analysis Report for Sep 16, 2020 | by Techniquant Editorial Team
Moving lower for the 4th day in a row, USDAUD finished Wednesday at 1.3687 losing 8 pips (-0.06%) on high volume. Trading 45 pips higher after the open, the pair 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 (USDAUD as at Sep 16, 2020):
Wednesday's trading range has been 123 pips (0.9%), that's slightly below the last trading month's daily average range of 130 pips. Weekly volatility is also lower, being below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for USDAUD.
Four candlestick patterns are matching today's price action, the Southern Doji which is known as bullish pattern and three neutral patterns, the Doji, the Long-Legged Doji and the Rickshaw-Man. The last time a Southern Doji showed up on September 1st, USDAUD gained 0.46% on the following trading day.
After trading down to 1.3615 earlier during the day, the market bounced off the key technical support level at 1.3682 (S1). The failure to close below the support could increase that levels importance as support going forward. After having been unable to move lower than 1.3618 in the prior session, the forex pair found buyers again around the same price level today at 1.3615.
Though the currency is experiencing a short-term uptrend, this might just be a correction, as both the medium and long-term trends are still bearish.
With prices trading close to this year's low at 1.3488, downside momentum could speed up should the FX pair break out to new lows for the year.
Among the eight market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Rickshaw-Man" stand out. While it is usually interpreted as neutral, it has actually shown to be bullish for USD/AUD. Out of 24 times, USDAUD closed higher 62.50% 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 58.33% with an average market move of 0.08%.