AUD/USD has been selling off in the past few days but it appears that the pair is closing in on a support zone with its correction pattern. The pair might pull back to the former resistance and area of interest at the .9300 major psychological level and bounce from there.
So far, the pair is already getting support from the 0.3% uptick in Australia’s CB leading index for February. This signifies that economic conditions are likely to improve in the next few months, which will support the hawkish monetary policy bias of the Reserve Bank of Australia (RBA). Recall that Governor Stevens emphasized that the RBA is no longer looking to cut interest rates in the near term.
AUD/USD Correction Pattern Wave Forecast
If the current rally carries on, AUD/USD might be on its way up to test the previous highs around the .9450 minor psychological resistance. Take note that the quarterly CPI report is due this week and a stronger than expected reading might be the push that AUD/USD needs to test its previous highs.
On the other hand, a deeper pullback could reach until the .9300 support zone and complete the corrective pattern of the pair. Make sure you check candlestick patterns and technical indicators during the support test to see if a bounce might take place.
A break below the .9300 mark would suggest that the pair’s uptrend may be over. This could lead to further losses for AUD/USD, perhaps to another test of the .9000 major psychological support zone. At this point, the movement would no longer be a corrective pattern but the start of a range behavior.
Zooming out to larger time frames would show that AUD/USD is forming a double bottom pattern, suggesting that a longer-term uptrend might take place. Another selloff could form another bottom, which would keep the pair inside a market range instead of a trend.
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