AUD/USD Price Aanalysis: Wait, we are in a bear trend?
- AUD/USD bears in charge in the long-term downtrend.
- US dollar takes on critical monthly resistance, will it hold above?
As per prior analysis, dated as far back as the start of the month, Chart of the Week: AUD/USD bears back in play, with reference made within to analysis as long as June of this year, it was a long time coming, but the breakout finally arrived this week.
Since June, AUD/USD had been analysed as technically bearish in a series of articles:
- Chart of the Week: Commodity currencies in focus, bears in control
- AUD/USD downside compelling for the days ahead
- AUD/USD Price Analysis: Bulls coming up for their last breath?
- Aussie Covid spread tainting bullish appetite in AUD
The final straw that broke the camel's back was the combination of the spread of covid in the nation resulting in fresh lockdowns and extensions to those.
When coupled with the dovish tilt in the Reserve Bank of Australia minutes, hawkish commentary from Federal Reserve officials and a subsequent rise in the US dollar, AUD/USD broke out from weeks of consolidation to mark a fresh low for 2021 on Thursday.
The following is a top-down analysis that arrives at a lower-for-longer outlook for AUD/USD.
From a monthly perspective, AUD/USD has been in a longer-term downtrend that most might have forgotten.
In this regard, the trend is your friend so the focus should be on the next layer of market structure to the downside and a test of the 0.70 figure for the weeks ahead.
From a weekly perspective, the candle is headed for a strong bearish close which leaves prospects of a downside continuation for the week ahead, but the price would ideally close below the August 21 weekly 2020 close of 0.7160.
Failing that, an upside meanwhile correction on the daily time frames is the most probable scenario for the immediate future.
The first port of call will be to test bearish commitments at a 38.2% Fibonacci retracement of the uninterrupted 4-days of daily candles in an overextended bearish impulse near to 0.7235.
Beyond there, the 50% mean reversion target near 0.7260 guards a fuller retracement to the old support and confluence with the 61.8% Fibo near 0.7290.
A break of the 4-hour highs of 0.7180 this week will likely seal the deal for a fuller retracement for the start of next week:
DXY analysis
Overall, much will depend on how the US dollar plays out now that it has broken above a very important area of resistance n the longer-term charts.
Bulls will want to see a weekly and then a monthly close above 93.50.
US dollar teases reversal traders, Golden Cross underpins
