Doji Candles in the AUD/USD – Is it a Good Time to Short?
Arslan Butt • 2 min read
The AUD/USD pair closed at 0.69766, after placing a high of 0.69772 and a low of 0.69210. Overall, the movement of the AUD/USD pair remained bullish throughout the day. After dropping for three consecutive days, the AUD/USD pair rose on Tuesday, posting gains on the back of the weakness of the broad-based US dollar, thereby improving the risk-on market sentiment. The pair posted gains but failed to break the key resistance of 0.700, due to positive data from the US and negative data from China.
The positive news from the US-based pharmaceutical giant, Moderna, said that it would start Phase 3 trials of its coronavirus vaccine on July 27. That would be the final phase of testing for the vaccine. Moderna is the first company in the US to begin testing coronavirus vaccines on humans.
This news lent some optimism to the market, which was heavily affected by the continuously increasing numbers of coronavirus cases across the board. After this news, a risk sentiment appeared in the market, and WSJ equities rose, weakening the US dollar and lending strength to the AUD/USD pair.
The AUD/USD pair ignored the ongoing tensions between the US and China, upon Beijing’s announcement of sanctions on Lockheed Martin for their involvement in the latest US arms sale to Chinese-claimed Taiwan.
The renewed lockdown restrictions in many cities and states across the globe, including Hong Kong, Philippines, Mexico, New South Wales, Victoria and California, gave impetus to the risk appetite, due to raised concerns over economic recovery. The Aussie, which is perceived as risky, gained traction and the AUD/USD pair rose.
On the other hand, the Chinese Trade Balance reported a surplus of 329 Billion Yuan and 46.4 Billion US dollars, weighing on the China-proxy Aussie, and this capped the additional gains in the AUD/USD pair.
From Australia, the NAB Business Confidence came in at 1 in June, compared to -20 in May. From the American side, the CPI rose to 0.6%, against 0.5%, and the Core CPI rose to 0.2%, against 0.1% supporting the US dollar and also limiting additional gains in the AUD/USD pair.
Daily Technical Levels
Pivot Point: 0.6958
The AUD/USD pair is trading sideways at around the 0.7010 to 0.6990 level. The closing of Doji candles suggests chances of selling bias in the pair, which could lead to a bearish correction until the 0.6970 level, while the continuation of the bullish trend could lead the AUD/USD prices towards 0.7035. Consider taking sell trades below 0.6986 and buying trades over the 0.7010 level today. Good luck!