- AUD/USD erases minor bounce from 0.70 to 0.7025.
- Technical studies indicate scope for deeper declines below 0.70.
AUD/USD revisits session lows seen during the early Asian trading hours, having faced rejection at 0.7025 following the release of an above-forecast China Caixin Manufacturing PMI at 01:30 GMT.
The daily chart indicators suggest the risks are skewed to the downside.
To start with, the MACD histogram, an indicator used to identify trend changes and trend strength, is producing deeper bars below the zero line. That’s a sign of the strengthening of downward momentum.
The 14-day relative strength index is reporting a bearish bias with a below-50 print, and the 5- and 10-day simple moving averages are trending south.
Lastly, the lower highs and lower lows setup seen on the daily chart indicates the bears in control.
As such, deeper support levels 0.6921 (July 14 low) and 0.68 (200-day simple moving average). A close above the 10-day simple moving average would invalidate the bearish bias.
Credit: FX Street