AUD/USD Technical Analysis: Sellers Seek Bounce for a Trade Setup
AUD/USD Technical Strategy: BEARISH
- Aussie Dollar breaks 2019 support, hints downtrend resuming
- Near-term sellers might be deterred as prices hover at support
- Shorts may find an opening as RSI divergence hints at bounce
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The Australian Dollar is back on the defensive after following a palpable dovish shift in RBA rhetoric. Prices have broken below support guiding the upswing since the beginning of the year, hinting that the dominant downward trend against the US Dollar has resumed.
Initial chart inflection point support is at 0.7078, with a break below that exposing the 0.7021-41 area. A breach of the latter barrier may open the door for a substantive decline toward the 0.69 figure. Resistance begins in the 0.7142-70 zone. Turning back above that would neutralize immediate selling pressure.
With prices squarely at support, sellers may find entering short now unattractive on risk-reward grounds. Positive RSI divergence on the four-hour chart hints at ebbing near-term selling pressure however, opening the door for a corrective bounce. That might offer an entry opportunity before the larger selloff resumes.
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.