AUDUSD – for nearly two years the Australian dollar has been systematically losing its value in relation to the US dollar. At the beginning of August this year, the exchange rate fell to 0.6675, i.e. 2009 levels. AUD belongs to the so-called commodity currencies, its strength depends on the prices of raw materials and the economic situation of the mining industry products. Australia is responsible for 30% of world iron ore production, and the decreasing demand for it, its main importer China caused by the customs war with the U.S., adversely affects the economy of the producer and its currency.
Looking at AUDUSD from a purely technical point of view, we see that last week there were attempts to correct the recent falls. The range of Monday’s daily candle turned out to be invincible for the following days, and the Inside Bar formation was formed. It is very likely that the price will leave the formation heading north. This scenario supports bullish divergence on D1.
Looking for a potential demand target we have to look at chart H4. Here we can see that the upper edge of the IB creates a confluence of resistance with the supply zone. Overcoming this confluence area should add bullish correction dynamics and quotations should reach the next supply zone of 0.6860. I would look for an entry into a long in the area of 0.6740-50.
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