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AUD/USD Technical Analysis: Aussie Dollar Rebound Brewing?

AUD/USD Technical Analysis: Aussie Dollar Rebound Brewing?

Ilya Spivak, Head Strategist, APAC

AUD/USD TECHNICAL OUTLOOK: BEARISH

  • Australian Dollar eyes test of pivotal support below 0.67 figure
  • Short-term chart setup hints a rebound may be brewing ahead
  • Trend line from 2020 high separates correction from reversal

The Australian Dollar extended lower against its US namesake as expected after breaking trend support guiding the rebound early-October swing lows. The decline followed the formation of a top above the 0.70 figure marked by the appearance of a bearish Evening Star candlestick pattern.

AUD/USD paused only briefly near initial support at 0.6755, pushing lower to challenge the long-standing price floor in the 0.6671-90 area. A daily close below this barrier would put the Aussie at levels unseen since 2009, with relatively little support to follow along the way toward 0.6550.

Australian Dollar vs US Dollar price chart - daily

AUD/USD daily chart created with TradingView

Shorter-term positioning warns that a rebound may be next however. The four-hour chart shows prices coiling up in a typically bullish Rising Wedge chart pattern. Positive RSI divergence speaks to ebbing downside momentum, bolstering the case for a reversal.

Confirmation on a break above the Wedge top would target the 0.6751-66 region initially. Thereafter, the trend line resistance defining the move lower since the beginning of the year comes into view. This is now at 0.6831. How prices behave here may define any upswing as either a correction or reversal.

AUD/USD Technical Analysis: Aussie Dollar Rebound Brewing?

AUD/USD 4-hour chart created with TradingView

AUD/USD TRADER SENTIMENT

AUD/USD TRADING RESOURCES

--- 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.

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