Bottom line: AUDUSD long term structure continues to remain bullish against 0.5505 lows since March 2020. Over the short term though, it has managed to carve a meaningful top around 0.7400 handle. Bears might be poised to remain in control for now.

 Fundamental Outlook:

Dow Jones had managed to gain in the past few sessions hitting 27730/50 highs before coming under pressure again. Optimism over another round of stimulus package might have induced the recent rally putting pressure on the US Dollar Index, which dropped below the 94.00 mark yesterday. It would be interesting to see if risk appetite continues to gain momentum.

Bitcoin has slipped to 10750 levels after hitting weekly high around 11000 mark. The crypto remains vulnerable to further drop as US Dollar might gain over the next few weeks. We might witness some strong bids coming in towards 7000-7500 range, going further.

AUDUSD has managed to take off immediate selling pressure after hitting 0.7000 handle over the last week. Since then, the risk associated currency pair has rallied through 0.7150 highs today, alongside global equity markets. The exchange rate might come under pressure again if risk aversion returns.

Technical Analysis:

AUDUSD had dropped almost 400 pips from the recent swing highs around 0.7400 mark, before finding some support. The currency has managed to rally through 0.7150 levels and might be preparing to resume lower towards 0.6770 in the near term.

AUDUSD had dropped through 0.5505/09 lows in March 2020. Since then, bulls have remained in control and managed to carve a series of higher highs and higher lows through 0.7400 handle recently. Also note that the above rally looks to be an impulse wave, which should be followed by a correction.

AUDUSD bears might remain poised to produce the proposed corrective drop towards 0.6770 and 0.6350 levels respectively. Also note that 0.6350 is close to fibonacci 0.618 retracement of the entire rally between 0.5505 and 0.7400 mark. Bulls might remain poised to be back in control from there.

Most traders might remain inclined to hold short positions initiated around 0.7350/0.7400 resistance zone. The protective stop might be placed above resistance at 0.7400 levels and projected target below 0.6400 going forward.

Prepared by

Harsh Japee, Technical Analyst.

AUDUSD Chart

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