AUD/USD Weekly Outlook

AUD/USD edged higher to 0.8787 last week but failed to sustain gain there and settled back into recent range. The case for reversal is building bearish divergence conditions in 4 hours MACD and RSI, but there is not confirmation yet with 0.8589 support intact. Nevertheless, while another rise cannot be ruled out, AUD/USD should continue to lose upside momentum ahead of 61.8% projection of 0.6284 to 0.8262 from 0.7702 at 0.8924 and at least bring some lengthier consolidation. On the downside, below 0.8589 support will confirm that a short term top is at least formed and bring deeper fall towards 0.8239 support next.

In the bigger picture, as noted before, the strength of the rise from 0.6008 argues that AUD/USD is developing into another up trend. In other words, long term correction from 0.9849 has possibly completed at 0.6008 already, after being support slightly above 76.4% retracement of 0.4773 (01 low) to 0.9849 (08 high). The current rally from 0.6008 might extend further to retest 0.9849 high next. On the downside, below 0.8239 support will have the medium term rising trend line firmly broken and thus argue that a medium term top is formed. Some deep pull back and lengthy consolidation might then be seen, with prospect of fall to 0.7267/7702 support zone. But a break of 0.7267 resistance turned support is needed to indicate that whole rise from 0.6008 has completed. Otherwise, we'll continue to favor the longer term bullish case even in case of deep correction.

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