Risk of stall to persist while 200DMA caps
The Australian dollar jumps in Europe on Monday after daily Tenkan-sen repeatedly kept the downside protected, in attempts to reduce risk reversal from Friday’s strong upside rejection and close in red which also formed daily bearish outside day.
Fresh optimism on US/China phase 1 trade deal and upbeat Chinese data revived risk sentiment and inflate Aussie.
Near-term action maintains bullish momentum and is underpinned by thick daily cloud, but south-heading stochastic after bearish divergence warns.
Repeated failure to close above 200DMA (0.6908) is negative signal and fresh recovery needs lift and close above here to generate bullish signal, confirmation of which would require close above cracked key barriers at 0.6930 zone (31 Oct high / Fibo 38.2% of 0.7393/0.6645 fall).
The downside is expected to remain vulnerable while the price action stays below 200DMA, with initial bearish signal expected on break below Friday’s low (0.6863) and rising 10DMA (0.6853).
Res: 0.6865; 0.6895; 0.6908; 0.6930
Sup: 0.6863; 0.6853; 0.6824; 0.6800