AUD/USD Weekly Outlook

AUD/USD's down trend reaccelerated to as low as 0.8029 last week. From a short term angle, further decline is still expected as long as 0.8393 resistance holds. However, note that AUD/USD is now pressing an important support level, firstly, long term rising trend line support, secondly, 0.8008 key medium term support and 55 months EMA (now at 0.8041). Break above 0.8393 will indicate that a short term bottom is finally in place and should bring strong rebound to above 0.8698 resistance and above before staging another fall. Though, sustained break of 0.8 level will encourage deeper decline to 0.7675 support first.

In the bigger picture, a medium term top is at least in place at 0.9849 with bearish divergence condition in weekly MACD and RSI. Initial downside target of 0.8512 cluster support (61.8% retracement of 0.7675 to 0.9849 at 0.8505) is already met. 0.8008 support is also met too. The main question now is whether long term up trend from 0.4773 (01 low) has completed too. Bearish divergence condition in monthly MACD and RSI serve as an important signal of a long term top.

Though, focus should still be on the long term rising trend line (0.4773, 0.7015, now at 0.8121). Firm break will confirm that such long term is finished. Also, consider the corrective three wave structure of the multi year up trend from 0.4773 to 0.9849, it could represents a correction to multi decade down trend or part of consolidation. Having said that, upon confirmation of completion of such rise from 0.4773, deep long term fall should be from 0.9849 at least to test 61.8% retracement of 0.4773 to 0.9849 at 0.6712.

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