AUD/USD Weekly Outlook

AUD/USD's rise from 0.9310 resumed last week and extended to as high as 0.9401. However, upside was limited by 61.8% projection of 0.9031 to 0.9345 from 0.9205 at 0.9399 and AUD/USD retreated sharply from there. With 4 hours MACD staying below signal line, an intraday top is in place. Initial outlook will be neutral this week. Nevertheless, with 0.9205 remains intact, favor is still in the case that rise from 0.8953 is still in progress. Above 0.9401 will indicate such rally has resumed for a retest of 0.9496 high first. However break of 0.9205 will dampen this view and argue that rally from 0.8953 has completed. Short term bias will then be turned bearish in this case.

In the bigger picture, correction from 0.9496 has likely completed with three wave down to 0.8953. Also, with 0.8873 cluster support still holds, rise from 0.8512 is still expected to extend further. Decisive break of 0.9496 will confirm that medium term up trend has resumed for next upside target of parity. However, below 0.9205 support will argue that rise from 0.8953 has completed and correction from 0.9496 is still in progress. In such case, focus will be turned back to 0.8873 support.

As discussed before, sustained trading below 0.8873 structural support will open up a few bearish possibilities. On the one hand, 0.9496 could represent an important medium term top. On the other hand, rise from 0.8512 could just be part of a wider range consolidation that started at 0.9398, with one more falling leg to follow. In either case, deeper decline should be seen to 0.8512 support first.

In the longer term picture, the whole 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, sustained break of 0.8512 support will firstly confirm that a medium term top is in place. Secondly, it will also argue that the whole rise from 0.7015 has also completed, possibly with bearish divergence conditions in weekly MACD and RSI. In such case, deeper decline would then be seen to 0.8008 resistance turned support.

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