AUD/USD’s rally from 0.6864 continued last week and accelerated higher. Initial bias remains on the upside this week. Firm break of 161.8% projection of 0.6864 to 0.7026 from 0.6921 at 0.7183 will bring retest of 0.7277 high. On the downside, below 0.7128 minor support will turn bias neutral and bring consolidations again.
In the bigger picture, price action from 0.7277 medium term top is seen as developing into a correction to rise from 0.5913 only. While deeper decline cannot be ruled out, downside should be contained by 38.2% retracement of 0.5913 to 0.7277 at 0.6756 to bring rebound. Consolidations would continue below 0.7277 for a while, before an eventual upside breakout. Firm break of 0.7277 will target 0.8006 (2021 high).
In the long term picture, rise from 0.5913 is seen as the third leg of the whole pattern from 0.5506 (2020 low). It’s still early to judge if this is an impulsive or corrective pattern. But in either case, further rise should be seen back to 0.8006 and possibly above. This will remain the favored case as long as 55 W EMA (now at 0.6870) holds.
