AUD/USD edged lower to 0.7084 last week but formed a short term bottom there and rebounded. With a temporary top in place at 0.7228, initial bias is neutral this week first. Another rise could be seen as the correction from 0.7084 extends. But upside should be limited well below 0.7361 resistance to bring down trend resumption. On the downside, break of 0.7084 will resume the fall from 0.8135 for key support level at 0.6826. However, sustained break of 0.7361 will carry larger bullish implication.
In the bigger picture, rebound from 0.6826 (2016 low) is seen as a corrective move that should be completed at 0.8135. Fall from there would extend to have a test on 0.6826. There is prospect of resuming long term down trend from 1.1079 (2011 high). Current downside momentum as seen in daily and weekly MACD support this bearish case. Firm break of 0.6826 will target 0.6008 key support next (2008 low). On the upside, break of 0.7361 resistance, however, argues that a medium term bottom is possibly in place, and stronger rebound could follow. We’ll assess the medium term outlook later if this happens.
In the longer term picture, the corrective structure of rebound from 0.6826 (2016 low) to 0.8135, and the failure to break 38.2% retracement of 1.1079 (2011 high) to 0.6826 at 0.8451, carry bearish implications. AUD/USD was also rejected by 55 month EMA. Now, the down trend from 1.1079 is in favor to extend. On break of 0.6826, next target will be 61.8% projection of 1.1079 to 0.6826 from 0.8135 at 0.5507.