AUD/USD continued drifting lower on Friday, falling below the support (now turned into resistance) barrier of 0.7240. The pair is still trading below the medium-term downtrend line taken from the peak of the 16th of February and thus, we would consider its outlook to be negative.
In our view, the dip below 0.7240 may have opened the way for the low of the 15th of August, fractionally above the 0.7200 mark. If the bears manage to reach and breach that zone, this would confirm aa forthcoming lower low on the daily chart and could the stage for our next support obstacle of 0.7160, defined by the lows of the 23rd and 28th of December 2016.
Our short-term oscillators detect strong downside speed and corroborate our view for further declines, at least until the 0.7200 zone. The RSI dipped below 30 and is now pointing down, while the MACD lies below both its zero and trigger lines, pointing south as well.
That said, given that the RSI lies within its extreme zone, we would stay cautious of a minor rebound after the rate challenges the 0.7200 zone, perhaps for the pair to test the 0.7240 hurdle as a resistance this time.
However, in order to start examining whether the bears have abandoned the battle, at least for the short run, and whether a stronger recovery may be in the works, we would like to see a clear move above 0.7275. Such a break could initially aim for the 0.7315 level, marked by Wednesday’s peak. Another move above 0.7315 could pave the way for the 0.7360 resistance obstacle.
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