Morning Market Update – AUD/USD

With the 0.7961 minor resistance intact, a deeper decline could still be seen in AUD/USD. But we’d expect strong support from the 0.7922 cluster to contain the downside and bring a rebound. On the upside, a break of 0.7961 will suggest that the pull back is completed. In such case, intraday bias will be turned back to the upside for retesting 0.7985. However, we prefer the downside with the recent price action rejecting the resistance strongly.

Looking at the bigger picture, a rejection from 0.7961 medium term top is still in progress. At this point, there is no confirmation of trend reversal yet and we’ll continue to treat such rejection as a corrective pattern. But in any case, a break of the resistance in question will target the 0.7985 retracement. A break of the 0.7922 support is needed to confirm the completion of the trend reversal. Otherwise, a further rise is now expected.

The dollar regains some momentum as the market continues to show signs of rallies from current levels. The recent candle was another rejection day where the bears have gained the upper hand and showed another sustainable impact, before once more resuming the decline overnight. The daily momentum indicators have all now taken on a corrective outlook, with the Stochastic both falling below 80 and having crossed lower.

The pair is now back into the old pivot band 0.7937, so it will be interesting to see the reaction. The likelihood is that the 0.7922 support which has often been seen as an inflection point will now be tested. The four hourly chart shows the support at 0.7922 is bolstered now as a key level, with 0.7922 initially an area of near term overhead supply. The AUD/USD pair tests the minor bearish channel’s resistance and keeps its stability below it. Stochastic loses its positive momentum gradually to approach from the overbought areas and is now declining, while the pair keeps forming negative pressure against the price.

Therefore, these factors keep the bearish trend scenario valid for the upcoming period, which targets testing 0.7922 followed by 0.7902 levels mainly, while holding below 0.7961 represents key condition to continue the expected decline.

Expected trading range for today is between resistance 0.7961 and 0.7902 support.

Expected trend for today: Bearish
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