The Australian dollar bounces from new low at 0.7041 (the lowest since Fed 2016, which was hit on Friday and retested today), as larger bears are taking a breather after last week’s 2.4% loss ( the biggest one week fall since the last week of January).
The Aussie was pressured by risk aversion, as well as strong fall in China stocks and yuan as the central bank loosened the policy.
Bears face headwinds from strong supply at psychological 0.70 support and may consolidate before eventual break lower.
Oversold daily studies suggest such scenario but lacking stronger signal for now.
Recovery attempts penetrated very thick hourly cloud (0.7072/0.7111) which acts as strong barrier but were so far unable to extend deeper into cloud, as former low at 0.7085 (11 Sep) marks next strong obstacle and fresh bulls show hesitation on approach.
Stronger recovery could stretch towards pivotal 0.7146 resistance (Fibo 38.2% of 0.7314/0.7042 bear-leg before bears regain control.
Only break here would sideline downside risk and open way for stronger correction.
Res: 0.7085; 0.7111; 0.7146; 0.7163
Sup: 0.7041; 0.7000; 0.6972; 0.6906
