The AUDUSD is breaking out of consolidation today.
It comes after several weeks of indecision above the multi-year support at 0.6670.
It’s the same level I pointed out in my January 16th short idea.
Notice how the AUDUSD broke below that ascending channel on January 24th.
The pair then closed back inside the larger descending channel that extends from the December 2018 high on January 27th.
As you can see, the Australian dollar has lost significant ground against the greenback in recent weeks.
That means today’s break could trigger the next leg lower for the pair.
If today closes the day below 0.6670, any retest of that area will likely attract an influx of sellers.
Of course, that doesn’t mean the AUDUSD will retest 0.6670.
Given the aggressiveness of this latest decline, a shallower retracement into the 0.6640 area may be more likely.
But it all comes down to how today’s session closes.
Remember that I use New York close charts so that each 24-hour session opens and closes at 5 pm EST.
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You can also use the short-term descending channel below to help guide any trades here.
Notice how the pair recently came off the top of this smaller channel.
That means a move to the bottom of the pattern is the most likely scenario.
The channel bottom could be 0.6500 or as low as 0.6450, depending on how long it takes for this next leg lower to unfold.
As long as the AUDUSD is below 0.6670 on a daily closing basis, those are my targets.
Alternatively, a daily close above 0.6670 would signal strength and negate the bearish outlook described above.