The AUDUSD has taken a beating over the last few days. Just when it looked as though buyers were gaining some traction above 0.7750, sellers were there to cap any advance.
The pair lost more than 200 pips in the final three sessions of last week. But the most significant development occurred during Friday’s session, namely when the pair closed for the week at 5 pm EST.
You may recall the trend line that extends from the 2016 low. I mentioned it way back on January 31 as the pair was approaching key resistance. You can see that commentary here.
From where I’m sitting, the AUDUSD broke that 2016 support level last Friday. The sub 0.7630 close made sure of that.
Sellers also managed to crack the 0.7640 horizontal level. You can see from the chart below how this area has served as a pivot since October of last year.
This breakdown leaves us watching for a retest of the 0.7630/40 area as new resistance. The next key support doesn’t come in until the 0.7500 handle which leaves us with plenty of room to work with.
Keep in mind that we could see some consolidation for the next few days before the next leg lower materializes. At the moment, the AUDUSD is trading nearly 100 pips below the daily mean, suggesting a temporary pause in the selling pressure.
Only a daily close (New York 5 pm EST) back above the 0.7640 area would negate the bearish outlook.