AUDUSD CHART ANALYSIS: BEARISH
- AUD bounce rejected at former support, countertrend line broken
- Downtrend resumption initial eyes support in the 0.6827-65 area
- Longer-term positioning hints at test of 0.67 figure on the horizon
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The Australian Dollar appears to have confirmed that the recent upswing against its US counterpart was corrective in the context of a larger downtrend, as expected. Prices dropped after putting in a demonstrative Bearish Engulfing candlestick pattern on a retest of support-turned-resistance and broke rising countertrend support set from mid-May, seemingly confirming the reversal.
Near-term support is now in the 0.6827-65 zone, marked by the latest swing bottom as well as the January 2016 low. Breaking below that on daily closing basis seems likely to open the door for a test of the 2019 spike low at 0.6744. Immediate resistance remains in the 0.6978-0.7021 zone, with a reversal back above setting the stage for a challenge of the downward trend in place since early December 2018.
Zooming out to the weekly chart hints that a still-deeper downturn might be in the cards. That the latest swing lower was triggered squarely at the underside of a completed Descending Triangle chart pattern appears to reinforce the setup’s validity, and thereby its broader implications. A measured-move objective derived from a conservative assessment of its widest point implies downward progression to test the 0.67 figure.
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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