AUD/USD Technical Strategy: BEARISH
- Australian Dollar testing key near-term support below 0.71 figure
- Breakout sets the stage for completing large bearish Triangle setup
- Invalidating bearish bias calls for a reversal back above 0.72 mark
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The Australian Dollar accelerated lower after rejection at resistance capping upside progress against its US counterpart since early December 2018, as expected. Prices are now testing support guiding the upswing from early March, with a breakdown confirmed on a daily closing basis opening the door for a challenge of the 0.6982-0.7021 area.
That marks the bottom of an emerging Descending Triangle pattern. The setup typically carries bearish implications. Completing it with a close through support’s outer layer would signal resumption of the dominant downtrend started in January 2018. In this scenario, extrapolating the Triangle’s height downward from the breakout point implies a downside objective at 0.6650.
Sizing up more immediate positioning on the four-hour chart, the 0.7049-73 congestion area seems to follow immediately after trend line support, with a breach below that setting the stage for a probe below the 0.70 figure. Thorough invalidation of the bearish tilt in overall positioning appears to call for a reversal back above the 0.72 figure, unlocking the range prevailing since mid-March.
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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