AUD/USD Retreats Back into Bearish Range Pattern

<p>June 19, 2015 – AUD/USD has retreated back into the tight trading range that has been in place since the beginning of June. This pullback […]</p>

June 19, 2015 – AUD/USD has retreated back into the tight trading range that has been in place since the beginning of June. This pullback on Friday follows Thursday’s surge that was prompted by moderate US dollar weakening post-FOMC.

Early Friday saw the US dollar regain some of its strength as it helped push AUD/USD back down into its previous range after the currency pair had been unable to rise above 0.7850 on Thursday.

Having eased back into this range and below 0.7800 once again, AUD/USD continues to display a clear bear flag pattern that hints at further potential downside. The upper resistance border of this inverted flag closely follows the 50-day moving average, while the lower support border is a short, rising trend line from the beginning of June.

AUD/USD Daily Chart

 

From a broader perspective, the longer-term trend also remains significantly bearish in line with the prevailing downtrend that has been in place for the past year, which saw a sustained plunge from the 0.9500-area high in July of 2014.

The 200-day moving average has served as a major resistance factor for this longer-term downtrend (most notably at AUD/USD’s mid-May peak), while the 50-day average is currently serving as resistance for the shorter-term flag pattern.

A break below 0.7700 followed by a subsequent break below this flag pattern would confirm the prevailing bearish bias. In that event, the next major downside target remains at the key 0.7500 level, which is just slightly below the five-year low of 0.7532 that was established in early April.

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.