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AUD/USD Technical Analysis: Ready to Drop Below 0.73?

AUD/USD Technical Analysis: Ready to Drop Below 0.73?

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Talking Points:

  • AUD/USD Technical Strategy: Flat
  • Australian Dollar may be poised to test below 0.73 against USD
  • Waiting for retracement seems prudent vs. entering short trade

The Australian Dollar has dropped to the lowest level in nearly five months against its US counterpart, unmoored in the aftermath of the US presidential election. A break of rising trend support established from lows set early in the year suggests deeper losses are probably ahead.

Near-term support is now at 0.7251, the 76.4% Fibonacci expansion, with a break below that on a daily closing basis opening the door for a test of the 0.7088-0.7145 area(May 24 low, 100% level). Alternatively, a move back above the 61.8% Fib at 0.7352 exposes the 0.7433-43 zone (50% expansion, double bottom).

It seems prudent to temper the temptation to enter short on a technical basis considering the near-term fundamental landscape may be conducive to a temporary Aussie recovery. With that in mind, it seems unattractive to chase prices lower here, waiting instead for a bounce to yield a better entry opportunity.

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