AUDUSD has performed incredibly well from a technical perspective.
We saw the rally from 0.6870 last month, which I discussed on January 9th.
We also saw AUDUSD get rejected from the 0.7130 resistance level I’ve had on my chart and even find support briefly at 0.7030.
However, the Australian dollar is back in a familiar range between 0.6870 and 0.7030.
We saw a perfect retest of 0.7030 resistance on Tuesday, and now AUDUSD is pressing against 0.6870 support.
In addition to the horizontal levels above, there’s a near-perfect ascending channel that’s remained significant since November.
Note that the channel above is equidistant, meaning the levels run parallel.
As of now, 0.6910 is resistance on an intraday basis, and a daily close below 0.6870 would further confirm the breakdown.
If that weren’t enough, the price action since mid-January looks like a head and shoulders pattern.
It’s most apparent on the 4-hour time frame.
If AUDUSD confirms the bearish reversal pattern above, the measured objective is 0.6600.
That’s close to the November and December lows at 0.6640.
We also have critical support at 0.6525 that served as resistance late last year.
It’s worth noting that 0.6525 has yet to be tested as new support, at least not yet.
But remember that AUDUSD needs a daily close below 0.6870 to confirm the potential head and shoulders above.
In summary, a close below 0.6870 is needed to secure the breakdown and open up levels like 0.6640 and potentially 0.6525.
Until then, 0.6870 is key support for the Australian dollar.
And if we see the pair reclaim 0.6910, we may see one more leg up for the market and risk assets as a whole.
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