The AUDUSD has been on a rollercoaster ride this week, with sharp swings in both directions. The week began with the pair trading below its 100- and 200-hour moving averages. Sellers then pushed the price below a trendline and a key swing area, sending it toward the 200-day moving average, but the decline stalled before that longer-term target could be reached.
Momentum then shifted dramatically. Helped by the FOMC reaction, the sharp decline in the USDJPY, broad U.S. dollar selling, and stronger equity markets, the AUDUSD rebounded aggressively. The pair climbed back above its 100- and 200-hour moving averages, tilting the short-term bias back to the upside, and extended above the 38.2% retracement of the decline from the May high to the late-June low at 0.7022. The rally reached 0.70435, stopping just 9 pips shy of the 100-day moving average at 0.7052.
Today’s trading has brought another twist. Renewed dollar buying pushed the pair lower, but sellers were unable to force a break below the rising 200-hour moving average at 0.6987. The rising 100-hour moving average at 0.69815 also helped underpin the price. Since then, the AUDUSD has bounced and is now once again testing the key 38.2% retracement level at 0.7022.
So yes, it has been a rollercoaster week. However, despite all the twists and turns, the technical picture still leans modestly in favor of the bulls as long as the pair remains above its 100- and 200-hour moving averages. A sustained move above the 38.2% retracement at 0.7022 would strengthen that bullish case and have traders targeting the 100-day moving average at 0.7052. A break above that level would hand buyers even greater control.
On the other hand, a move back below the 200- and 100-hour moving averages would shift the bias back toward the sellers and signal that another leg lower may be underway.
For now, keep your hands inside the car—the ride remains volatile, but the key technical levels continue to provide the roadmap.
This article was written by Greg Michalowski at investinglive.com.