AUDUSD Chart Analysis: Eyeing 0.67 as Election Bounce Fizzles

AUDUSD Technical Strategy: BEARISH

• AUD bounce on Morrison election win rejected at near-term resistance
• Break of January 2016 bottom exposes 2019 spike low below 0.68 mark
• Longer-term positioning implies a descent to 0.67 in the coming weeks

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The Australian Dollar has seemingly failed to make much of a politically-driven upward jump against its US counterpart at the start of the week. The currency touched the top of its month-long downtrend after Prime Minister Morrison unexpectedly triumphed in the federal election but swiftly recoiled lower, helped along by dovish commentary from the RBA.

Prices are eyeing near-term support at 0.6827, the January 2016 bottom. Breaking below that opens the door for a challenge of the 2019 spike low at 0.6744. Trend line resistance is now at 0.6930. A breach above that confirmed on a closing basis neutralizes immediate selling pressure and sets the stage for a retest of support-turned-resistance in the 0.6978-0.7021 area.

Zooming back to a weekly chart, overall positioning continues to point to resumption of the 2018 downtrend following a period of consolidation. That sideways drift traced out a Descending Triangle chart pattern, which now implies a measured downside objective near the 0.67 figure. The upcoming release of minutes from this month's FOMC meeting may help drive the setup’s realization.

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

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