Bearish Divergence in AUD-USD

By: Mike Kulej

 After making the all time high at1.0165, the AUD-USD is starting to show signs of weakness. It was best exemplified early on Thursday, when, following a disappointing unemployment report, the Australian Dollar sold off broadly, including a 100 pips drop in relation to the US Dollar.

On the daily chart of the AUD-USD, we can see the strong uptrend, which took this pair above the parity level. It is still intact, it has not been broken yet, but there are some bearish signs under development. The most striking is the divergence between the price and the MACD indicator. This suggests a market correction of some magnitude, which could turn into a trend reversal. Candlesticks formed a possible topping formation, with bearish implications.

We can see a doji and a hammer, followed by a strong bearish candlestick. Such combination is often found at important turning points and this one could have a similar outcome. To be sure, in order to call the uptrend “reversed”, additional confirmation is needed. One should look for the price to breach either the main trendline, or the level of the latest low, which is at 0.9650, or both. However, the emergence of this MACD convergence could be the first step.

Did you like what you read? Let us know what you think!

exclamation mark

Please make sure your comments are appropriate and that they do not promote services or products, political parties, campaign material or ballot propositions. Comments that contain abusive, vulgar, offensive, threatening or harassing language, or personal attacks of any kind will be deleted. Comments including inappropriate will also be removed.

0 User comments

exclamation mark

Please make sure your comments are appropriate and that they do not promote services or products, political parties, campaign material or ballot propositions. Comments that contain abusive, vulgar, offensive, threatening or harassing language, or personal attacks of any kind will be deleted. Comments including inappropriate will also be removed.

Read more
Add new comment
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.