AUD/USD TECHNICAL OUTLOOK: BEARISH
- AUD may retest near 0.69 after completing bullish Flag pattern
- Overall price direction continues to favor a broadly bearish bias
- Counter-trend line break needed for actionable short-side setup
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The Australian Dollar may move up to retest the 0.69 figure against its US counterpart before the broader downward trend resumes in earnest. Prices rebounded after testing resistance-turned-support at 0.6811, completing a bullish Flag chart pattern (as suspected last week).
Initial resistance is marked by the 23.6% Fibonacci expansion at 0.6856. A break above that opens the door for a test of the 0.6886-95 area marking the to of the range confining trade since mid-September. This barrier is reinforced by the 38.2% level at 0.6887.
4-hour AUD/USD chart created with TradingView
Turning to the daily chart for a broader picture suggests the dominant trend bias still looks decidedly bearish however. AUD/USD remains capped by resistance leading it lower since early December 2018. A daily close above that level – now at 0.6946 – is needed to convincingly neutralize selling pressure.
Daily AUD/USD chart created with TradingView
In this context, any near-term gains look likely to be corrective (at least for now), offering a potential opportunity to establish shorts relatively more attractive levels. An actionable trade setup probably requires bearish resumption confirmation on a close below counter-trend support set from October lows.
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
To contact Ilya, use the comments section below or @IlyaSpivak on Twitter
