AUD/USD fell to as low as 0.7003 last week but recovered after hitting 61.8% retracement of 0.6864 to 0.7237 at 0.7006. Initial bias is turned neutral this week for consolidations. Deeper decline is expected as long as 0.7074 support turned resistance holds. Fall from 0.7237 is seen as the third leg of the corrective pattern from 0.7277. Below 0.7003 will target 0.6864 support next.
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.
