AUDUSD TECHNICAL OUTLOOK: BEARISH
- AUDUSD testing trend support after rejection at technical resistance
- Downside follow-through probably demands break of June 2016 low
- Break of falling trend line just below 0.71 may invalidate bearish bias
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The Australian Dollar retreated from downtrend resistance capping gains since early December 2018 as expected, albeit after managing a slightly larger recovery than anticipated. Prices are now testing pivotal support guiding the upswing from mid-June.
Breaking below this barrier on a daily closing basis initially faces a minor barrier at 0.6911, the July 10 low. Making the case for lasting bearish trend development probably requires a further breach of the support shelf running down through the January 2016 low at 0.6827.
Immediate trend line resistance now stands at 0.7069, with added reinforcement at the 0.7082 (the July 19 high). A rebound that brings about a daily close above the latter sets the stage for a foray north of the 0.72 figure to challenge 0.7206-35 congestion zone.
On balance, the dominant trend bias continues to favor the downside. However, proximity to trend support might discourage traders from committing to sizable short-side exposure on risk/reward grounds. A clear-cut breakdown or confirmed invalidation of bearish positioning is probably needed for lasting follow-through.
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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