AUD/USD Symmetric Triangle Pattern – Time to Trade Choppy Session!
Arslan Butt • 2 min read
The AUD/USD pair closed at 0.71056, after placing a high of 0.71249 and a low of 0.70634. Overall, the movement of the AUD/USD pair remained bullish throughout the day. On Friday, the AUD/USD pair dropped to a daily low of 0.70634, but gained traction during the American Session, as the US dollar came under renewed selling pressure. As a result, the AUD/USD pair started moving in an upward direction, almost reaching the 0.71249 level.
The escalating tensions between the US and China caused the China-proxy AUD to lose in earlier sessions, in response to the closure of the Chinese consulate in Houston by the US, and China’s retaliation, in which they also closed the US consulate in Chengdu. US Secretary of State Michael Pompeo called for an end to “engagement,” a policy that has defined US-China relations for nearly five decades. The policy is considered to be the most important foreign policy achievement by China in recent history.
At 94.41, the US Dollar Index dropped to its lowest level since September 2018, weighing on the greenback and pushing the AUD/USD pair onto the higher side.
On the data front, the preliminary data published by the HIS market showed a drop in the Manufacturing PMI, to the 51.3 level, compared to expectations of 52.0. The Flash Services PMI dropped to 49.6 from the projected 51.0, dragging the greenback further down.
On the Australian side, the Flash Manufacturing PMI data released on Friday improved in July, rising to 53.4 from 51.2 in June. The Flash Services PMI also improved to 58.5 in July, from 53.1 in June, lending support to the upward movement of the AUD/USD pair.
The Aussie, which is perceived as risky, suffered further due to the risk-off market sentiment, after an increase in coronavirus cases in the US. On Saturday, the US marked the second day with over 70,000 new coronavirus cases and more than 1,000 deaths in 24 hours. The total number of infections in the has US reached 4.1 M, and the fatalities have crossed the 145,324 mark.
Daily Technical Levels
Pivot point: 0.7098
The AUD/USD is has entered the overbought zone, having surged sharply to trade at the 0.7147 level. Closing of a Doji candle suggests odds of a selling bias in the Aussie. On the lower side, the AUD/USD pair could drop to the 0.7120 level, while resistance is likely to stay at 0.7150. Good luck!