AUD/USD Technical Analysis: Two-Year Uptrend Threatened

AUD/USD Technical Strategy: Flat

• Attempted Australian Dollar rebound fizzles, channel floor back in focus
• Breaking below immediate support exposes key two-year rising trend line
• Waiting for improved risk/reward parameters to enter AUD/USD position

Sellers are pressuring the Australian Dollar toward trend-defining support that has guided the currency higher against its US counterpart for over two years. A bounce in the wake of the Fed policy announcement was aborted by disappointing jobs data and risk aversion after the US slapped China with punitive tariffs.

From here, a daily close below the 0.7665-76 area (channel floor, 23.6% Fibonacci expansion) opens the door to challenge 0.7608 (trend line from January 2016, 38.2% level). Alternatively, a turn back above the March 22 high at 0.7785 paves the way for a test of channel top resistance at 0.7894.

Prices are too close to immediate support to justify entering short from a risk/reward perspective. Taking up the long side looks premature absent a defined bullish reversal signal however. With that in mind, opting to stand aside until a better-defined opportunity presents itself seems most prudent for now.

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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

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