AUD/USD Still Looks Bullish Despite Trendline Breakout

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AUD/USD Still Looks Bullish Despite Trendline Breakout

The AUD/USD slid last week. It was mainly attributed to a export-decline-drive widening of the trade deficit in Australia. Then, RBA govenor Stevens talked about the risk of a strong AUD. We have seen the song and dance before, so the bearish reaction is not a surprise. The strong NFP on Thursday pulled the AUD/USD further.

AUD/USD 4H chart 7/7audusd 7/7 4H chart

The 4H chart shows the break below a couple of rising trendlines from June, but a hold above the 200-SMA in the 4H chart. It should also be notd that the 0.9320-0.9330 area is a support/resistance pivot area. The 61.8% retracement level is a tad lower, at 0.9315.

If the noted support factors hold, AUD/USD is neutral to bullish. It will have to push above 0.94 and the 100-, 500- 4H SMAs to revive the bullish continuation outlook. The 4H RSI should also break above 60 in this bullish continuation scenario. This price action would open up the 0.95 handle, which was near the high last week, and was a fresh high on the year. In this scenario, the October 2013 high at 0.9755 will be in sight.

Otherwise, trades can still confirm the current bearish breakout if price turns back down from 0.94, and the RSI holds below 60 in the 4H chart. The bearish scenario would put focus on a key support area in 0.92-0.9210.

AUD/USD Daily Chart 7/7audusd 7/7 daily chart

Note the breakout of a rising trendline in the daily chart as well. However, the daily chart shows a bullish bias as price made fresh highs on the year last week near 0.95 and is now still trading above all the moving averages (200-, 100-, 50-) shown on the daily chart.

Currently the consolidation we saw in the 4H chart is hovering above the 50-day SMA. A break below this factor adds to the case of further bearish correction and focus back to the 0.92-0.9210 support.

To contact the reporter of this story, email Fan Yang at fan@forexminute.com
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