The Australian dollar rose in early Monday after hitting new multi-month low at 0.6662 last Friday.
China is back to business after extended Lunar New Year holidays and slight optimism about coronavirus epidemic could be slowing, lifted Aussie after Friday’s 0.8% fall (the biggest one-day loss since 7 Jan).
Bears are taking a breather after being in control for six straight weeks, as traders booked some profits, before bears clearly break strong support at 0.6670 (2 Oct low, the lowest since early Jan 2018).
Daily studies are still in full bearish setup but fading negative momentum supports current action.
Converging 5/10DMA’s in attempt to create bull-cross, mark initial barriers at 0.6716/19, with close above here to generate initial bullish signal which will be reinforced by formation of daily bullish engulfing on close above 0.6736 (Friday’s high) and expose pivotal barrier at 0.6765 (Fibo 38.2% of 0.6933/0.6662 descend).
Caution on failure to clear 10DMA barrier that would keep the downside at high risk.
Eventual break of cracked 0.6670 pivot would open way continuation of larger downtrend towards 0.6261 (Fibo 76.4% of 2001/2011 0.4773/1.1079 ascend).
Res: 0.6719, 0.6736, 0.6765, 0.6788
Sup: 0.6662, 0.6643, 0.6600, 0.6585
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