audusd at inflection zone to kick start another potential downleg 1847952017

Since our last analysis dated on 16 March 2017, the AUD/USD had reacted as expected right below the predefined 0.7755 major pivotal resistance and hit the downside target/support of 0.7585. Click here for a recap on our previous report.

Now, let’s take a look at its latest technical elements

Short-term technical outlook on AUD/USD

(Click to enlarge chart)

Key technical elements

• After it printed a low of 0.7583 on 28 March 2017, the pair had staged a rebound which stalled right at the 23 March 2017 minor swing high area of 0.7680.
• Interestingly right below 0.7680, it has started to trace out exhaustion signals. Firstly, a bearish “Ascending Wedge” chart pattern has been formed from the 0.7630 minor support. Secondly, the hourly RSI oscillator has traced out a bearish divergence signal at the overbought zone which indicates a slowdown in upside momentum that tends to precede a potential bearish reversal in price action.
• Based on Elliot Wave Principal and fractal analysis, the recent rebound from the 0.7585 minor swing low area is likely a minor degree corrective wave 2 with potential end target at the 0.7680/0.7700 zone. Thus, current price action of the pair is now right below an inflection zone to kick start a potential bearish impulsive minor degree wave 3.
• The next significant short-term support rest at 0.7550 which is defined by the minor congestion area of 10 March to 14 March 2017 and the 76.4% Fibonacci retracement of the recent up move from 09 March 2017 low to 0.7750 high seen on 21 March 2017.

Key levels (1 to 3 days)

Intermediate resistance: 0.7680

Pivot (key resistance): 0.7700

Supports: 0.7630, 0.7585 & 0.7550

Next resistances: 0.7750

Conclusion

As long as the 0.7700 short-term pivotal resistance is not surpassed, the AUD/USD is likely to stage another potential downleg to retest 0.7585 before targeting the next support at 0.7550.

On the other hand, a clearance above 0.7700 may negate the preferred bearish scenario for a further push up to retest the major resistance area of 0.7750.

Charts are from eSignal

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