FxWirePro: AUD/USD bears back in action at double bottom neckline – Trade boundary strikes and uphold long hedge on double top

AUDUSD short term outlook: Weakness for the day is observed at the double bottom neckline at 0.7024 levels.

Prior to which, we’ve seen bullish pattern with bottom 1 at 0.6864 and bottom 2 at 0.6831 levels signals strength in minor uptrend and stated one-touch call options strategy, consequently, bulls managed to spike above 0.6940 (i.e. 21-DMAs) with bullish crossovers and hit 0.7024 (that was the upper strikes advocated in our previous call (refer daily chart).

For now, rallies seem to have been exhausted upon bearish engulfing pattern at this juncture but unwise to extend further rallies up to the stiff resistance of 0.7025 levels, while the momentum oscillators entered in overbought zone and trend indicate strength for further rallies.

Well, thereby, the pair is all set to trade between consolidation range of 0.6831-0.7025 areas, but it’s questionable how far it can run given trade tensions plus an RBA cut looming.

Long-term outlook: Bearish engulfing patterns at 0.7760 and 0.7042 levels nudge prices way below EMAs, consequently, the major downtrend dragged further 4-months lows upon breach below the double top neckline at 0.7359 level (refer monthly plotting). 

RSI and stochastic curves indicate intensified selling momentum on this timeframe, while bearish EMA and MACD crossovers signal downtrend to prolong further.

Hence, it is wise to snap any deceptive rallies at that juncture to build short hedges by shorting futures of mid-month tenors ahead of RBA monetary policy that is scheduled for this week, as the AUD in the broader perspective still appears to be vulnerable.

On the flip side, as both the momentum and trend oscillators on daily term indicate strength for further rallies, intraday or short-term traders can participate in the minor trend of this pair by buying boundary options strategy using upper strikes at 0.7025 and lower strikes 0.6831 levels.

Currency Strength Index: FxWirePro's hourly AUD is flashing at 24 levels (mildly bullish), while hourly USD spot index was at 88 (highly bullish) while articulating (at 06:09 GMT). These indices are conducive for our intraday trades as shown above.

For more details on the index, please refer below weblink: http://www.fxwirepro.com/currencyindex