AUD/USD Talking Points:
- AUD/USD has been struggling lately to pick a direction in its downtrend since February
- Key near-term support and resistance levels have been firming making for tough barriers
- There are hints it might turn higher soon, but a down move also has long-term implications
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The Australian Dollar seems to be struggling to pick a direction to choose from against its US counterpart as of late. In the meantime, well-established support and resistance levels have formed and the gap between the two is slowly shrinking. These are the 76.4% Fibonacci retracement at 0.7651 and the descending line from March 16th respectively.
Before AUD/USD got to where it is now, the pair has essentially been in a downtrend since February. Since then, a falling wedge bullish pattern has formed. However, for confirmation, the pair will have to ascend to and break above the upper line of the formation. Positive RSI divergence shows that momentum to the downside is ebbing and it hints that prices may soon turn higher.
Beyond the aforementioned level, the next resistance target is the 61.8% retracement at 0.7743. A push above that exposes the upper line of the falling wedge. Should AUD/USD break through, it may soon find itself struggling to get past the 50% midpoint of the retracement.
On the other hand, if prices want to keep falling, there are multiple obstacles that would be important to watch. Namely, you also have the rising trend line from January 2016. A break below that could mean that AUD/USD may find itself testing the December 8th low at 0.7501. Though keep in mind that the lower line of the falling wedge could even control its descent if it does stay in play.
AUD/USD Trading Resources:
- Join a free Q&A webinar and have your trading questions answered
- Having trouble with your strategy? Here’s the #1 mistake that traders make
- See how the Australian Dollar is viewed by the trading community at the DailyFX Sentiment Page
--- Written by Daniel Dubrovsky, Junior Currency Analyst for DailyFX.com
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