AUD/USD Cleared to Descend to 2016 Lows as Key Support Gives Way
Australian DollarTechnical Forecast: Bearish
AUD/USD Prices Talking Points
- Australian Dollar overcame ebbing downside momentum as dominant downtrend accelerated
- December/May 2016 levels and range support breached, now eyeing January 2016 lows next?
- Push through support exposes 0.70092, ascent through resistance has AUD/USD facing 0.72
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As expected, the Australian Dollar overcame ebbing downside momentum against its US counterpart and its dominant downtrend since January picked up pace for a second week in a row. While AUD/USD’s descent was not as potent as last week, the pair breached under the December and May 2016 lows below 0.71452. Looking at the weekly chart below, AUD/USD is now cleared to descend to the January 2016 lows at 0.68274.
So where does this leave the Australian Dollar on the daily? Well looking at the chart below also reveals an interesting picture. AUD/USD has not only broken through 0.71452, but it also fell under a descending range of support which helped control its decline since May. However, the pair stopped just short of the 61.80% Fibonacci extension at 0.70888 which might as well stand as immediate support going forward.
The push through range support also marked the pair’s single largest decline in a day since August 23rd which was over two weeks ago. If the dominant downtrend in AUD/USD once again resumes, a push under 0.70888 exposes the 78.6% Fibonacci extension at 0.70092.
Meanwhile, near-term resistance is a combination of the December/May 2016 lows and the descending range. Pushing above 0.7160 then opens the door to testing the 38.2% extension at 0.72007 followed by the 23.6% level at 0.72699. With that in mind, the descent through key support levels prolongs the bearish AUD/USD technical outlook.
** Charts created in TradingView
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--- Written by Daniel Dubrovsky, Junior Currency Analyst for DailyFX.com
To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.