AUD/USD retreated sharply after edging higher to 0.6567 last week but downside is contained above 0.6481 minor support so far. Initial bias stays neutral this week first. Overall, corrective pattern from 0.6624 should still be extending. Above 0.6567 will target 0.6624. Firm break of 0.6481 will resume the correction through 0.6418 to 38.2% retracement of 0.5913 to 0.6624 at 0.6352.
In the bigger picture, there is no clear sign that down trend from 0.8006 (2021 high) has completed. Rebound from 0.5913 is seen as a corrective move. While stronger rally cannot be ruled out, outlook will remain bearish as long as 38.2% retracement of 0.8006 to 0.5913 at 0.6713 holds. Nevertheless, considering bullish convergence condition in W MACD, even in case of another fall through 0.5913, downside should be contained above 0.5506 (2020 low).
In the long term picture, fall from 0.8006 is seen as the second leg of the corrective pattern from 0.5506 long term bottom (2020 low). Hence, in case of deeper decline, strong support should emerge above 0.5506 to contain downside to bring reversal. On the upside, firm break of 0.6941 will argue that the third leg has already started back to 0.8006.
