AUD/USD Weekly Outlook

AUD/USD dipped further to as low as 0.8770 last week but managed to hold above lower channel support and rebounded strongly. The break of inner falling trend line resistance argues that fall from 0.9220 might be finished with three waves down to 0.8770 already. Initial bias is neutral this week with focus on 0.9087 resistance. Break there will suggest that whole rise from 0.8066 is still in progress and is resuming for another high above 0.9220. On the downside, break of 0.8770 will reaffirm the case that rise from 0.8066 is finished and should target a retest on this low.

In the bigger picture, price actions from 0.9404 are consolidations/correction to medium term up trend from 0.6008. Rebound from 0.8066 is treated as the second leg inside such consolidation. Hence even in case of another rise, we'd expect strong resistance near to 0.9404 to limit upside and bring another fall to continue the consolidation. On the downside, break of 0.8315 support will suggest that whole correction is going to extend deeper to beyond 0.8066 support, possibly to 0.7702 key support before completion.

In the longer term picture, long term correction from 0.9849 has likely completed at 0.6008 already, after being supported slightly above 76.4% retracement of 0.4773 (01 low) to 0.9849 (08 high). Rise from 0.6008 is possibly developing into a new up trend which extend the long term rise from 0.4773. We'll continue to favor the long term bullish case as long as 0.7702 support holds and expect an eventual break of 0.9849 high. However, a break of 0.7702 support will firstly argue that whole rise from 0.6008 has completed. Secondly this will open up the case that AUD/USD is in phase of a long term consolidation and will gyrate in the large range of 0.6008/0.9849 for some time.

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