AUD/USD: Neutrality Emerges in the Bearish Channel
The dominance of the US dollar, driven by expectations of a high interest rate (4.5%) from the Federal Reserve as the annual CPI (2.9%) remains far from the 2% target, has weakened the Australian dollar in the short term. The AUD/USD has lost 11% of its value since late September 2024, and for now, neutrality has taken over the market as the next Federal Reserve decision (January 29) approaches.
Bearish Channel
The bearish channel stands out as the most significant technical formation on the chart currently. The price has consistently adhered to oscillations between the channel’s upper and lower boundaries. However, recent minor bullish corrections have led to price stagnation near the support zone, which aligns with the channel's current upper boundary. Over time, this could challenge the integrity of the bearish formation, particularly if short-term buying pressure continues to build.
Neutral Movements
By Julian Pineda, CFA - Market Analyst
Bearish Channel
The bearish channel stands out as the most significant technical formation on the chart currently. The price has consistently adhered to oscillations between the channel’s upper and lower boundaries. However, recent minor bullish corrections have led to price stagnation near the support zone, which aligns with the channel's current upper boundary. Over time, this could challenge the integrity of the bearish formation, particularly if short-term buying pressure continues to build.
Neutral Movements
- The ADX indicator line remains above the neutral zone of 20 but has started to decline steadily from its recent highs in the 40 range.
- The TRIX line continues to oscillate below the neutral 0 zone, indicating that the average movements of the exponential moving averages have been predominantly bearish. However, the line’s slope has turned positive and is gradually approaching the neutral zone in the short term.
Both indicator trends suggest that the long bearish momentum might be experiencing a period of exhaustion, coinciding with the neutrality generated by the current support zone. If this effect persists, the existing bearish channel may struggle to generate new lows in the coming sessions.
Key Levels - 0.62906: Current resistance level. Persistent oscillations near this level could ultimately invalidate the current bearish channel formation dominating the chart.
- 0.61929: A key support level, responsible for halting the long bearish trend. It aligns with recent weekly lows and the upper boundary of the bearish channel. Sustained oscillations below this level could signal a new phase of selling pressure and revive the current bearish trend.
By Julian Pineda, CFA - Market Analyst
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