AUD/USD Breaks Below 0.89, Exposing the 2014-Low at 0.8660

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AUD/USD Breaks Below 0.89, Exposing the 2014-Low at 0.8660

Next Stop for AUD/USD: 2014-Low
AUD/USD has been like a falling knife since breaking a multi-month consolidation, which had support at 0.92. Just in September, aud-usd went from a bullish continuation outlook to a sharply bearish outlook. The daily chart shows this dramatic reversal. Even as the RSI shows oversold conditions, price is still falling, truly a sign of a downtrend. This week, the pair opened with a bearish attempt that broke below the 0.89 handle as well as the 0.8890 support pivot, exposing the 0.8660 low on the year.

AUD/USD Daily Chart 9/22
audusd daily chart 9/22

(click to enlarge)

When we look at the 4H chart, we see AUD/USD in a persistent downtrend. The 200-, 100-, and 50-period simple moving averages (SMAs) are sloping down, in bearish alignment, spreading apart, and price is below all of them. The RSI is holding below 60 after tagging 20. showing strong bearish momentum. At this point, a break above 0.90, support/resistance pivot from last week, will be needed to open up any significant consolidation or correction.

AUD/USD 4H Chart 9/22
audusd 4h chart 9/22

(click to enlarge)

When we move up to the weekly chart, we can see that the bearish outlook is in line with the trend since 2011, when price retreated from a high of 1.1080. Coincidentally, gold also retreated from around the same time from its record high. Well, not coincidentally – AUD and gold has a positive correlation.

In any case, the weekly moving averages are in bearish alignment with price below them. We are seeing lower highs and lower lows. The weekly RSI reading has stayed below  60 and has been able to fall below 30, showing bearish momentum. The 0.8660 level is a valid projection for the current downtrend.

Given the prevailing bearish mode, we can expect the decline to fall further beyond 0.8660, though as the weekly RSI falls below 30 again, we can expect some consolidation at least within the week if not longer.

AUD/USD Weekly Chart 9/22
audusd weekly chart

(click to enlarge)

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Fan Yang has been a professional forex trader and analyst since 2007. He specializes in technical analysis and has a Chartered Market Technician designation since 2011. He was the chief technical strategist at CMSFX He was also the founder and chief currency strategist at FXTimes Over the years, Fan has not only been a trader and analyst but also an educator. As a proponent of both technical and fundamental analysis in trading, Fan advocates simplicity and discipline as key factors in making trading decisions when faced with so many "clues" and "signals". Currently Fan Yang is the chief currency analyst and webinar instructor at forexminute.com.