Bottom line: AUDUSD long term structure continues to remain bullish against 0.5505 lows since March 2020. The currency has managed to print an intermediary high around 0.7400 mark and prices should ideally stay below lower. Bears might be poised to push through 0.6300 mark.
AUDUSD had rallied through 0.7200/10 mark yesterday, before facing renewed selling pressure. It had dropped over -1.11%, closing below 0.7100 end of the day. As global equity markets collapsed, the risk associated AUDUSD lost against the US Dollar alongside EURO, Sterling Pound and New Zealand Dollar. The exchange rate might remain under pressure over next several weeks.
AUDUSD had managed to print marginally above 0.7200 handle yesterday, before reversing sharply lower. The currency had print lows around 0.7096 mark and is trading marginally higher at 0.7125 as we prepare to publish. Bears might remain inclined to remain in control from here.
AUDUSD had dropped to 0.5505/10 lows in March 2020, before bulls managed to take control. They remained in control for the next several weeks pushing through 0.7400 handle. A significant past resistance was also taken out around 0.7395 levels. The entire rally unfolded as an impulse, which should ideally be followed by a corrective drop.
AUDUSD might have already begun the corrective drop since 0.7400 highs and continue lower from here or slight higher around 0.7350/70 zone. Either way, bears are expected to be back in control and push prices lower through 0.6300 mark.
Also note that fibonacci 0.618 retracement of the entire rally between 0.5505 and 0.7400 is seen through 0.6300 zone. Hence, high probability remains for a bullish reversal of prices manage to reach there. Most traders might remain inclined to initiate fresh short positions around 0.7250/0.7300 resistance zone with protective stop above 0.7400 handle and projected target towards 0.6300 respectively.
Harsh Japee, Technical Analyst.
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