Since Tuesday last week, AUD/USD has been hit by hard selling and continued to drift lower up until Friday’s close. The pair broke the short-term upside support line, drawn from the 9th of May. Still, the pair wasn’t able to touch the 0.7410 mark, which was near the lowest point in May, even though, judging by the current picture, AUD/USD may be heading that way. Overall, the pair is below the long-term upwards moving trendline, taken from the lows of the 10th of January 2016. Also, AUD/USD is below the mid-term downwards moving trendline, drawn from the highs of the 16th of February. Therefore, having these conditions in mind, we would consider the medium-term outlook to be negative.
OUTLOOK (SCENARIO A / B)
If AUD/USD remains on the same track and continues to push lower towards the 0.7410 area, this could make the bears feel more confident, who in their case, could try and break that area in order to aim for lower levels. The next potential good area of support could be the lowest point for the month of May last year, which was around the 0.7330 mark. A break of that could open the doors towards the next key area of support at 0.7155 level, which was the December 2016 low.
The RSI is below 50 and seems like it is on its way towards the 20 zone, even though the indicator is now pointing slightly higher. The MACD is below its zero threshold and below the trigger line as well. Both indicators are looking somewhat more bearish than bullish.
Alternatively, a reversal back up to the 0.7475 level could interest the bulls in driving the pair slightly higher again. The next potential area of resistance could be the 0.7515 mark, a break of which could take AUD/USD towards the 0.7565 level for a quick test. If that level is not able to withhold the rate from rising, then we could see the pair fully recovering its last week’s losses and making its way towards the 0.7625 zone. We could then start aiming for a test of the aforementioned long-term upwards moving trendline.
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