AUD/USD Weekly Outlook

AUD/USD's decline from 0.9849 accelerated even further last week and dived to as low as 0.6330, taking out 0.6773 key medium term support without hesitation. From a short term angle, initial bias remains on the downside this week as long as 0.6759 minor resistance holds. Further decline is still expected to next downside target of 76.4% retracement of 0.4773 to 0.9849 at 0.6712 at 0.5971. On the upside, note that mild bullish convergence condition is being displayed in 4 hours MACD. Above 0.6759 will argue that a short term bottom is in place and bring rebound to 0.7135 and above before resuming the down trend.

In the bigger picture, the strength of the fall from 0.9849 strongly suggests that it's developing into an impulsive fall in at least the same degree as the up trend from 0.4773 to 0.9849. The current interpretation is that first wave of such fall has completed at 0.7802. Second wave correction has completed at 0.8519 and fall from there should represents the third wave decline. In other words, we're probably in the middle of such decline only. Any interim correction should be limited below 0.7802 support turned resistance and bring down trend resumption.

In the longer term picture, a long term top is in place at 0.9849 with bearish divergence condition in monthly MACD and RSI. Considering the corrective three wave structure of the multi year up trend from 0.4773 to 0.9849 and the impulsive nature of the fall from 0.9849, the long term down trend could be resuming. Having said that, while some interim medium term consolidation could be seen, the fall from 0.9849 is in favor to extend to retest 0.4773 low at least.

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