AUD Technical Outlook
AUD Technical Outlook: AUD/USD, AUD/JPY Rolling Over
In the first week of the month AUD/USD broke numerously tested support around 7700 only to have it turn out to be a false break the very next day. A symptom of low volatility. Yesterday, on a surprising twist by the Fed to adjust rate hike expectations the level was broken again along with the low of the fake-out day.
Today we are seeing some follow-through and with that the 200-day MA is about to come into play at 7548 along with the low in April at 7531. Given the way AUD has been behaving in recent months, stalling and showing signs of a top, testing and breaking these levels may only be a formality.
We will want to pay attention to the quality of price action as new support comes into view. Should we see only a minor reaction or none at all, then this will confirm the idea that a larger top has been put in place and a broader move lower may have only begun.
Keep an eye on equity markets as they have stalled, and a sell-off in stocks will indicate broader risk aversion that is almost certain to have further impact on the direction of AUD vs both the USD and JPY.
AUD/USD Daily Chart
AUD/JPY has been forming a narrowing range the past few months and looks about ready to get resolved. Not long ago the ascending wedge looked ready to break to the upside in-line with the broader trend, but with today’s price action we may indeed see a confirmed breakdown.
Given the duration and size of the pattern it could lead to a sizable decline. First up as minor support right around the 83-line, followed by more meaningful support at the bottom of wedge, under 82. Should things turn aggressive on the risk-off front we could see a decline to the rising 200-day, currently at 80.31.
There is still lots of time left in today’s session, so it will be important for AUD/JPY to hold onto the breakdown by the close. A close below 83.93, the lowest point over the past few weeks, should do the trick in confirming the breakdown.
AUD/JPY Daily Chart
Resources for Forex Traders
Whether you are a new or experienced trader, we have several resources available to help you; indicator for tracking trader sentiment, quarterly trading forecasts, analytical and educational webinars held daily, trading guides to help you improve trading performance, and one specifically for those who are new to forex.
---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
