The bearish sentiment continues to weigh on the Australian Dollar as it now teases the US$0.7365-70 support area.
Still remaining on the back foot to the start of the new week could see a rebound from this region soon.
That said, we still need to monitor the USD Dollar Index since late last week’s rebound now puts the bulls in a prime position to claim the 93.00-60 region.
Other than the COVID-19 virus woes, indecision over the U.S. Federal Reserve’s next moves, amid firmer data also weigh on the AUD/USD pair.
For the week, highlights the minutes from this month’s RBA policy meeting (Tuesday), June retail sales (Wednesday), and trade and quarterly business confidence data (Thursday).
One ‘technical takeaway’ is bullish divergence is evident from the Relative Strength Index (RSI) 3-daily ‘lookback’ indicator.
Divergence is a popular trading signal because they are dynamic and often offer a reliable, high-quality trading signal reversal when combined with other trading tools and concepts. In technical analysis, divergence can be a significant warning signal that a bullish or bearish trend is coming near an end.
Divergence appears when a technical indicator (oscillator) begins to establish a trend that disagrees with the actual price movement.
Bullish divergence occurs when the price of an asset makes a new low while the indicator starts to climb.
Meanwhile, the Moving Average Convergence Divergence (MACD) holds a weak negative signal.
Although the downside target reveals the US$0.7365-70 area, it is assessed (from the bullish divergence), a sharp rejection (or rebound) may soon occur and put the bulls back on the path to US$0.7435, to US$0.7485-95. Reassess from there.