Is the AUDUSD gearing up to move even lower?
If so, what key support area needs to break to make that happen?
Watch the video below to find out.
Be sure to also scroll down for more commentary and an annotated chart.
The AUDUSD rally could be in trouble after this latest plunge.
On January 2nd, I wrote about how the AUDUSD might be ready to pullback.
The pair had just retested a key resistance area at 0.7015. I wrote about this level back when the Australian dollar was breaking out from 0.6880.
Although the AUDUSD short-term uptrend is technically still intact, this latest pullback appears to be more than a simple correction.
That’s especially true based on today’s 70+ pip selloff.
If I were going to buy the pair, I would want to see a gradual pullback into key support, such as 0.6930.
However, the AUDUSD barely paused at 0.6930 before moving even lower.
Additionally, notice how little “white space” there is between the late December rally and this latest rotation lower.
It’s the opposite of a rounded retest that would prompt one to buy at support.
So what does all of this mean?
It means that the confluence of support near 0.6810/20 is exposed.
That’s the last line of defense for buyers, in my opinion.
If we see the AUDUSD close the day below that 0.6810/20 region, it could indicate an end to the short-term uptrend.
It could also reignite the longer-term downtrend that began in February of 2018.
In summary, the confluence of support at 0.6810/20 is support for now, but a daily close below it would indicate weakness and expose the 0.6680 region.