AUD/USD, Australian dollar – Technical Outlook:
- AUD/USD’s recent rally could take a breather.
- The rebound since October appears to be corrective so far.
- What is the outlook and what are the key levels to watch?
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The Australian dollar’s rally against the US dollar could take a breather as it has run into a stiff hurdle, including a downtrend line from April, the 89-day moving average, and the July low of 0.6685. The pair was last above the moving average in April.
AUD/USD Daily Chart
Chart Created Using TradingView
So, a break above could be important, potentially opening the way toward the August high of 0.7135, though the price objective of a minor reverse head & shoulders pattern triggered earlier this month points to a potential rise toward 0.6900 (the left shoulder is at the September low, the head is at the October low, and the right shoulder is at the early-November low).
AUD/USD 12-minutes Chart
Chart Created Using TradingView
Moreover, the sharp rebound in price in recent weeks wasn’t enough to trigger a major rebound in momentum on the weekly charts. The 14-week Relative Strength Index continues to stay below the 50 mark – previous rallies in AUD/USD stalled when RSI was close to 50 (see weekly chart). This suggests the rebound from last month may be no different from the previous corrections, that is, there isn’t much evidence yet to suggest the five weeks-long rally is a trend reversal.
AUD/USD Weekly Chart
Chart Created Using TradingView
AUD/USD is now testing key support at Thursday’s low of 0.6630. Any break below could open the way toward a horizontal trend line from the end of September, at about 0.6520, coinciding with the 200-period moving average on the 120-minute chart. AUD/USD could try to find a floor near here. However, any break below could open the door toward the November 10 low of 0.6390, which could be tough support to break.
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— Written by Manish Jaradi, Strategist for DailyFX.com
