AUD/USD extends declines down to key support

<p>AUD/USD (daily chart) has extended its six-week decline to hit key support around the 0.9000 psychological level. In the process, the currency pair established a […]</p>

AUD/USD (daily chart) has extended its six-week decline to hit key support around the 0.9000 psychological level. In the process, the currency pair established a three-month low yesterday. The current drop occurs after the pair formed a head-and-shoulders reversal pattern with its late-October high at 0.9757. The substantial bullish correction that was halted by this head-and-shoulders pattern represented a 50% Fibonacci retracement of the long and steep plummet from April to August. Shortly after breaking down below the neckline of this reversal pattern in early November, there was a brief pullback to the upside before the pair swiftly began its current slide.

With the downside target of the head-and-shoulders pattern having already been fulfilled around the 0.9050 level, the directional outlook for AUD/USD continues to look bearish. Currently, the clear downside objective after having dropped to the 0.9000 psychological support level now resides around the 0.8850-area multi-year low, which was hit in early August. Any subsequent breakdown below this level would clearly confirm a continuation of the overall bearish trend, with a further downside target around 0.8600. Key upside resistance currently resides around the 0.9200 level.

 

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.