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AUD/USD Technical Analysis: Aussie Breaks Key Support

AUD/USD Technical Analysis: Aussie Breaks Key Support

Ilya Spivak,

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Talking Points:

  • AUD/USD Technical Strategy: Pending short at 0.7572
  • Aussie Dollar may be resuming long-term down trend vs. US cousin
  • Bounce sought to improve risk/reward parameters for short position

The Australian Dollarhas broken through the floor of the rising trend guiding prices higher since the beginning of the year, hinting that the long-term down trend is resuming. The breakdown occurred against a backdrop of negative RSI divergence, bolstering the case for a topping scenario.

Initial support is in the 0.7463-98 area (horizontal pivot, 23.6% Fibonacci expansion), with a break below that on a daily closing basis opening the door for a test of the 38.2% level at 0.7373. Alternatively, a reversal above the January 24 high at 0.7609 sees the next major upside barrier at 0.7760, a double top.

Prices are too close to near-term support to justify entering short from a risk/reward perspective. With that in mind, an entry order to sell the pair at 0.7572 has been established. If activated the trade will initially target 0.7498 and carry a stop-loss activated on a daily close above 0.7609.

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