AUD/USD’s extended decline last week confirmed short term topping at 0.7237. But with recovery from 0.7074, initial bias remains neutral this week first. On the downside, sustained trading below 38.2% retracement of 0.6864 to 0.7237 at 0.7095 will target 61.8% retracement at 0.7006. Nevertheless, firm break of 0.7139 will turn bias back to the upside for stronger rebound.
In the bigger picture, price action from 0.7277 medium term top is seen as developing into a corrective pattern to rise from 0.5913. While another fall 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 M EMA (now at 0.6814) holds.
