AUD/USD Mid-Day Outlook

Daily Pivots: (S1) 0.9450; (P) 0.9478; (R1) 0.9524; More

AUD/USD's retreat from 0.9505 dragged 4 hours MACD below signal line, suggesting that an intraday top is in place. Outlook is turned neutral for the moment and further pull back to 4 hours MACD (now at 0.9404) or below could be seen. Nevertheless, downside should be contained above 0.9339 support and bring rally resumption. As discussed before, prior break of inner falling trendline suggests that corrective fall from 0.9541 has completed at 0.9275 already. Break of 0.9505 will bring retest of 0.9541 high. However, below 0.9339 will argue that consolidation from 0.9541 is still in progress and will put focus back to 0.9252 cluster support holds (50% retracement of 0.8953 to 0.9541 at 0.9247). Nevertheless, short term outlook should still be mildly bullish as long as this cluster support holds.

In the bigger picture, outlook is tricky as AUD/USD fails to sustain above 0.9469 high despite making new 24 year high at 0.9541. Also, upside momentum is so far unconvincing with bearish divergence conditions in daily MACD & RSI, as well as weekly MACD and RSI too. Focus should now be on the short term rising trend line (0.7675 to 0.8512, now at 0.9031). At long as this trend line support holds, recent up trend should still be in force. Such rally is treated as resumption of long term up trend from 0.4773 (01 low) is still expected to extend further to next medium term target of 100% projection of 0.4773 to 0.8008 from 0.6773 at 1.0008 which overlaps with parity.

However, break of the mentioned trend line support will argue that price actions from 0.7675 was probably in form of a diagonal triangle which was already completed at 0.9541. This will also argue that rally from 0.7015 has also completed with five waves up to 0.9541 too. In other words, 0.9541 should be an important medium term top in such case, deeper decline should then be seen at least to 0.8870 medium term resistance turned support.

Subscribe to our daily and mid-day newsletter to get this report delivered to your mail box