Technically, there could be value in the Aussie
July 26 (Reuters) -Looking for a turn in trends can be a dangerous game but recent price action in the Australian dollar suggests there might be scope for a direction change.
AUD/USD and AUD/JPY, falling sharply since July 12, could, at the least, be about to correct higher. False support breaks and the formation of potential trend reversal signals on the daily chart suggest there might be value in the Aussie at current levels.
AUD/USD has lost 4.25% in value this month, hitting a July 25 low of 0.6511 and dropping below its Ichimoku cloud. However, the price managed to close back inside the cloud, leaving a long lower candlestick shadow and hammer reversal warning, albeit with a large real body (shaded area between the open and close). The hammer signal needs confirmation and a bull close today would strengthen the reversal call.
A similar story for AUD/JPY, which hit a Thursday low of 99.30 having peaked at 109.31 earlier this month. A more pronounced 9% decline in the cross this month. The 200-day moving average, supporting the AUD since June 2023, was breached but a rebound into the close kept the long-term support intact. A hammer candlestick formed, with a smaller real body, and the AUD trades bullishly from the Friday open.
Retracement targets, should AUD adjustments set in, are at 0.6621 and 101.66 AUD/USD and AUD/JPY, respectively.
For more click on FXBUZ
AUD/USD daily Ichimoku chart: https://tmsnrt.rs/3LIhRc9
AUD/JPY daily candle chart: https://tmsnrt.rs/46qbmEf
(Peter Stoneham is a Reuters market analyst. The views expressed are his own)
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