AUD/USD Technical Analysis: 12-Month Aussie Downtrend Over?
AUD/USD TECHNICAL OUTLOOK: NEUTRAL
- Australian Dollar challenging year-long downtrend resistance
- Break upward may neutralize bearish bias, target above 0.69
- Long-term chart positioning warns against bullish exuberance
The Australian Dollar finds itself at a decisive point as prices challenge resistance guiding them lower since November 2018. A daily close above this barrier initially opens the door to challenge of 0.6930, October’s swing high. More critically however, such a move would suggest the near-term bearish bias has been neutralized, setting the stage for extension upward.
It bears mentioning however that prices dropped on each of the five occasions that this resistance was tested over the past year, shedding 4.5 percent on average. Initial support is marked by recent swing lows at 0.6800 and 0.6755. Making the case for full-throated downtrend resumption probably calls for breaching the range floor containing prices since early August, in the 0.6671-90 zone.
Zooming out to the monthly chart seems to bolster the bearish argument. It shows AUD/USD doing little since July as a break of four-year support near the 0.70 figure is digested. That move was preceded by a still-more tectonic breach of 17-year support in August 2018. On balance, that makes recent price action appear as consolidation before downtrend resumption, with the 0.60-0.6352 zone beckoning ahead.
Monthly AUD/USD chart created with TradingView
AUD/USD TRADING RESOURCES
- Just getting started? See our beginners’ guide for FX traders
- Having trouble with your strategy? Here’s the #1 mistake that traders make
- Join a free live webinar and have your trading questions answered
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
To contact Ilya, use the comments section below or @IlyaSpivak on Twitter
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.