AUD/USD TECHNICAL OUTLOOK: NEUTRAL
- Bearish Evening Star candle setup at resistance precedes AUD reversal
- Prices poised to break monthly uptrend, attempt downtrend resumption
- Follow-through may re-engage structural decline following retracement
The Australian Dollar recoiled downward after putting in a bearish Evening Star candlestick pattern at resistance marked by the top of a rising channel broadly containing price action since early October 2019. The currency has now traded through support guiding December’s rally and looks poised to secure a break back below former resistance in the 0.6930-39 zone.
Confirming the breach on a daily closing basis would set the stage for a descent into a thicket of back-to-back support levels along the way to the channel floor, now just a hair above the 0.68 figure. Securing a foothold below that would make a compelling argument for downside follow-through as the long-term downward trend is re-engaged in earnest.
Daily AUD/USD chart created with TradingView
Indeed, turning to the monthly chart suggests there is ample scope for weakness on the horizon. Although December delivered the largest rise in 2.5 years, the move conspicuously fell just short of breaking back above the upper layer of support-turned-resistance at 0.7018. This hints that recent gains have been corrective before resumption of structural Aussie depreciation puts the 0.6009-0.6352 zone into the spotlight.
Monthly AUD/USD chart created with TradingView
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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