AUD/USD Technical Analysis: 2019 Downtrend Ready to Resume?
AUD/USD TECHNICALOUTLOOK: BEARISH
- Aussie Dollar rejected at resistance near 0.69, eyeing bearish resumption
- Four-hour chart warns against over-extrapolating bearish follow-through
- Daily close below October’s counter-trend support eyed for confirmation
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The Australian Dollar recoiled from resistance just below the 0.69 figure against its US counterpart, marked by the mid-September swing top and a downward-sloping barrier defining the downward trend from early December 2018. Prices may now challenge counter-trend support set from October’s low. A daily close below that would suggest a corrective upswing has ended and the broader bearish trajectory re-engaged.
Zooming into the four-hour chart for a bit more detail on near-term positioning warns against over-extrapolating the bearish scenario however, at least for now. The start of the reversal is compelling enough: a bearish Evening Star candlestick pattern to mark the top along with negative RSI divergence to bolster the sense that upside momentum has withered.
Still, prices have yet to breach resistance-turned-support at 0.6811 marking the prior swing top in October’s upswing, meaning the pullback might yet prove to be no more than a retracement. Further still, the outlines of a possible bullish continuation Flag pattern have appeared. Confirmation on a bounce and subsequent close above its upper boundary would set the stage for a retest near 0.69, at minimum.
On balance, that paints the current situation as broadly inconclusive, at least from an actionable trading perspective. The overall trend looks to be firmly bearish and its resumption may be at hand after a to the upside but making the case for imminent downward follow-through is difficult without further evidence. A daily close below the trend line established from the October 2 low is probably a prerequisite.
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.