Analysis and forecast for AUD/USD on February 18, 2020

By | February 18, 2020
InstaForex
Analysis and forecast for AUD/USD on February 18, 2020

Greetings dear colleagues!

Today’s review of the “Australian” will begin with the published minutes of the last meeting of the Reserve Bank of Australia (RBA). It follows from the minutes that RBA executives discussed options where monetary policy easing is possible or necessary. This is the current trend. Following the Federal Reserve System (FRS), the rest of the world’s largest and most influential central banks do not even think about raising the main interest rates. It is still good if rates remain at the same levels and all the world’s leading central banks have a tendency towards easing monetary policy.

The minutes also noted that monetary policy easing at a faster pace will help achieve the inflation and employment goals.

Of course, the RBA could not ignore the topic of coronavirus, which, according to bank members, poses risks to the Chinese and Australian economies. In this light, let me remind you that China is Australia’s largest trading partner.

In principle, there is nothing revolutionary new in the RBA minutes published today. The Australian regulator is still leaning towards easing monetary policy, however, it is in no hurry to take real steps in the form of lowering the main interest rate.

It is no wonder that with this approach, the Australian dollar continues to weaken against its American namesake. To understand this in more detail, let’s go to the charts of the AUD/USD currency pair.

Weekly

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On the weekly timeframe, it is clearly visible that this currency pair is trading in the range of 0.6663-0.6775 for the third week. It seems to me that only the exit from the designated range will indicate the further direction of the AUD/USD rate. However, the market is sometimes very unpredictable, so it is always necessary to consider alternative options.

The exit from the indicated range may be false, the pair will return to it, after which the exit (already true) will take place in the other direction. This is often the case for many currency pairs, and not only for exiting different ranges.

In my personal opinion, at the moment, the pair has more chances to carry out a corrective pullback than to continue the downward dynamics. In principle, there is nothing more to add to the weekly timeframe, so we move to smaller time intervals.

Daily

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On the daily chart, the initial pullback was limited to a strong technical level of 0.6750, after which the pair returned to a downward trend. At the time of writing this article, Ozzy has a better chance of testing the support at 0.6663 again than of returning to upward. It is clear that market participants did not like the content of the RBA minutes published today. Of course, the emphasis was on options for easing monetary policy, and not the other way around.

It is worth noting the resistance provided to the price by the Tenkan line of the Ichimoku indicator. I believe that if this line is broken, the bulls on the “Australian” will breathe easier, but for now, everything is bad for them.

At the same time, it must be admitted, and this is clearly visible from history, that the price area 0.6673-0.6663 has repeatedly pushed the AUD/USD rate up. Let’s see what happens this time.

In the case of a true breakdown of the support level of 0.6663, the fall of AUD/USD will not only continue but will become even more accentuated.

H4

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A very strong bearish trend is clearly visible when looking at the 4-hour chart of the AUD/USD currency pair. Naturally, in such a situation, we should only talk about sales as deals that are opened on a trend. As you can see from the stretched grid of the Fibonacci tool, the main levels for opening short positions on the “Australian” are 23.6 and 38.2 Fibo.

Although the area of 0.6775-0.6780 also looks very good for sales. Here, both the resistance level of 0.6750 and the 200 exponential moving average. I believe that together they are able to give a serious rebuff to players for promotion. The main trading idea for the AUD/USD pair is selling after rollbacks and corrections, as well as opening short positions after the breakdown of the support of 0.6663, on a rollback to this broken level.

Good luck!

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

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