AUD/USD TECHNICAL OUTLOOK: BEARISH
- Australian Dollar eyes test of pivotal support below 0.67 figure
- Short-term chart setup hints a rebound may be brewing ahead
- Trend line from 2020 high separates correction from reversal
The Australian Dollar extended lower against its US namesake as expected after breaking trend support guiding the rebound early-October swing lows. The decline followed the formation of a top above the 0.70 figure marked by the appearance of a bearish Evening Star candlestick pattern.
AUD/USD paused only briefly near initial support at 0.6755, pushing lower to challenge the long-standing price floor in the 0.6671-90 area. A daily close below this barrier would put the Aussie at levels unseen since 2009, with relatively little support to follow along the way toward 0.6550.
( 03:02 GMT )
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Shorter-term positioning warns that a rebound may be next however. The four-hour chart shows prices coiling up in a typically bullish Rising Wedge chart pattern. Positive RSI divergence speaks to ebbing downside momentum, bolstering the case for a reversal.
Confirmation on a break above the Wedge top would target the 0.6751-66 region initially. Thereafter, the trend line resistance defining the move lower since the beginning of the year comes into view. This is now at 0.6831. How prices behave here may define any upswing as either a correction or reversal.
AUD/USD 4-hour chart created with TradingView
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— Written by Ilya Spivak, Currency Strategist for DailyFX.com
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