AUD/USD Technical Strategy: BEARISH
- Australian Dollar rejected at three-month resistance yet again
- Overall positioning still argues in favor of bearish resumption
- Break of near-term support line needed to build confirmation
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The Australian Dollar is pulling back after yet another test of resistance guiding the currency lower against its US counterpart since early December 2018. Overall positioning still hints at a Triangle formation, which carries bearish continuation implications in the context of drop from January 2016 top.
Confirming the setup would require a daily close below support in the 0.6982-0.7021 area. That would initially expose the 0.6900 figure as the next downside barrier. Alternatively, a break above the outer layer of trend line resistance – now at 0.7212 – targets the January 31 high at 0.7295 next.
Turning to short-term positioning, the four-hour chart reveals that prices are testing counter-trend support underpinning the latest upswing from the March 19 bottom. The absence of a confirmed break seems to skew risk/reward parameters against taking up the short side for the moment.
Even if a break does materialize, a notable congestion area in the 0.7046-57 zone follows closely thereafter. On balance, this probably means that traders will wait for a piercing of the latter threshold before practically committing to a directional bias.
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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