AUD/USD Mid-Day Outlook

Daily Pivots: (S1) 0.8095; (P) 0.8163; (R1) 0.8275; More

AUD/USD retreats sharply after climbing to 0.8262 earlier today and with 4 hours MACD dragged below signal line, an intraday top should be in place. Some pull back might now be seen. But after all, another rise is still in favor as long as inner channel support holds (now at 0.7885). Above 0.8262 will target target 61.8% retracement of 0.9849 to 0.6008 at 0.8382. But strong resistance should be seen as AUD/USD approaches 0.8519 resistance. On the downside, below the inner channel support will argue that a short term top is formed and should turn focus back to 0.7449 support for confirmation.

In the bigger picture, while current rally is strong without a doubt, there is no change in the view that price actions from 0.6008 are treated as correction to down trend from 0.9849 only. Having said that, firstly, current rally is still expected to terminate inside resistance zone of 0.7802/8519, with 61.8% retracement of 0.9849 to 0.6008 at 0.8382 in between and hence we remain focused on reversal signals. Break of 0.7449 support will argue that rise from 0.6284 has completed and should turn short term outlook bearish then.

However, note that sustained break of 0.8519 resistance will seriously dampen this view and argue that the sharp decline from 0.9849 to 0.6008 was indeed a correction to long term rally from 0.4773 to 0.9849 only. And in such case, stronger medium rise could then be seen to retest 0.9849 high.

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