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AUD/USD Technical Strategy: Flat
- Australian Dollar has scope to extend recovery after finding support above 0.77
- Near-term downtrend remains intact, hinting on-coming gains may be corrective
- Bounce may offer short trade setup, long trade unattractive absent confirmation
The Australian Dollar may have scope for a bounce after two weeks of heavy selling brought the currency to the lowest level in six weeks against its US counterpart. The appearance of a bullish Piercing Line candlestick pattern followed by a break of near-term resistance hints at further near-term gains ahead.
From here, a break above the 38.2% Fibonacci retracement at 0.7903 confirmed on a daily closing basis opens the door for a challenge of the 50% level at 0.7948. Alternatively, a move back below the 23.6% Fib at 0.7848 paves the way for a retest of the 0.7732-59 area (chart inflection point, February 9 low).
The series of lower highs and lows defining the downtrend from the January 26 high remains intact, hinting that any gains from here might be corrective in the context of a longer-term descent. Opting to stand aside for now seems prudent until a short trade signal emerges or the bearish bias is conclusively overturned.
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