AUDUSD is the latest victim to fall prey to the proverbial risk averse avalanche that has already had its way with several currency pairs this week.
This isn’t too surprising considering yesterday’s AUDJPY close below channel support. The two currency pairs tend to broadcast the other’s intentions ahead of time, and the past 24 hours have been no exception. I have also mentioned the technical implications of a move lower for AUDUSD in recent weeks, so it is certainly something that has been on our radar for some time now.
The key level in question is the former trend line support that extends off of the 2015 low at 0.6910. This level was tested as support on several occasions in 2015 and should therefore act as new resistance if tested as such in the coming sessions.
In the bigger picture, the descending channel that has been in place since the October 2014 high remains intact. If we pair channel support with prominent swing lows from recent years, an argument can be made (as over-ambitious as it may seem) for an eventual move as low as 0.6250 in the coming weeks and months.
The 0.6250 handle intersects with several lows from 2008/2009 and is also the 76.40% Fibonacci retracement from the 2001 low to the 2011 high.
It’s important to remember that a move of this magnitude will not materialize overnight, if at all. With this in mind, anyone with the idea to “sell and hold” should consider the risks involved and fully prepare themselves mentally for what is likely to be a long journey.