AUD/USD Technical Outlook
The greenback is the overall winner this year, with the AUD/USD pair topping at 0.8135 in January, to trade at the time being roughly 100 pips above a yearly low of 0.7020 achieved in October. The bounce from this last stalled short of the 38.2% retracement of the yearly slide at around 0.7440, a level that proved strong multiple times between June and August, as it has been unable to recover above it ever since piercing it. Long-term charts indicate that the risk is skewed to the downside as in the weekly and the monthly charts, the pair is developing below all of its moving averages. The bearish case is firmer in the monthly chart, with a break below the yearly low confirming more slides coming, first heading to 0.7032, December 2016 low and later to 0.6826, 2016 yearly low. At this point, the dollar doesn't seem to have the strength enough to take down this last. The 61.8% retracement of the yearly slump stands at 0.7710, a level that the pair can reach on a firm recovery above the mentioned 0.7440, but not overcome if the trade war
continues.
Early warnings this market has been on weak footing for several years occurred in the form of counts 1 and 2 established in 2011. After playing around the parity level for a year, at the beginning of 2013 the pair succumbed again leaving a large column of Os. Vertical count 3 was then established targeting the 0.6000: the low of the 2008 crisis and unwinding of the carry trade. More recently, the reversal from the 2016 lows generated an upside target at 0.9600 which is threatened with a break below the very 0.6800 figure. Only a break of the 0.8100 levels would change the trend to bullish mode and offer hopes of the 0.9600 target being reached.


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