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AUD/USD Technical Analysis: Down Trend Set to Resume?

AUD/USD Technical Analysis: Down Trend Set to Resume?

Ilya Spivak, Head Strategist, APAC

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Talking Points:

  • AUD/USD Technical Strategy: Flat
  • Aussie Dollar Bounce Stalls at Key Trend Line, Hints at Possible Downturn
  • Opting to Pass on Short Position Pending Bearish Reversal Confirmation

The Australian Dollar moved higher against its US counterpart as expected following the appearance of a bullish Morning Star candlestick pattern. Prices have now stalled at trend line resistance capping gains since mid-May, with a Doji-like candle hinting a rejection downward may be in the cards ahead.

Near-term support is at 0.7088, the 14.6% Fibonacci expansion, with a break below that on a daily closing basis clearing the way for a challenge of the 23.6% level at 0.7041. Alternatively, a push above the 50% Fib retracement at 0.7173 – a barrier reinforced by the aforementioned trend line barrier – opens the door for a test of the 61.8% threshold at 0.7236.

Positioning is inconclusive for now. The candlestick setup points to indecision and may merely represent prices’ acknowledgement of an important technical ahead, marking a pause prior to an upside break rather than on-coming reversal lower. With that in mind, we will remain flat for now and wait for confirmation before pulling the trigger on a short position.

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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