AUD/USD:
Downbeat risk sentiment and spirited USD demand weighed on AUD efforts to the upside on Monday. Technically speaking, recent softness is not a surprise. Candlestick enthusiasts will acknowledge the week carved out a shooting star pattern from weekly prime resistance at $0.7849-0.7599. This, coupled with a market trending lower since August 2011, the daily timeframe has space to manoeuvre lower towards trendline resistance-turned support, extended from the high $0.8007, and a 38.2% Fibonacci retracement at $0.7397. Those who read previous writing may recall the unit withdrew from $0.7660 on 5th April: a daily double-bottom patterns ($0.6991) profit objective that dovetailed with a 100% Fibonacci projection at $0.7645 (AB=CD harmonic structure), as well as the weekly prime resistance noted above. One final point regarding the daily timeframe is the relative strength index (RSI) shaking hands with the 50.00 centreline after dropping from overbought territory in early April.
Lower on the curve, H4 price elbowed under $0.7451 and subsequently retested the level as resistance. This further adds weight to the bearish narrative, with room to drop as far south as H4 Quasimodo resistance-turned support at $0.7349. On the H1 timeframe, we can also observe the currency pair dipping a toe in waters below $0.7424, perhaps clearing the river south to $0.74.
Technical Outlook:
While the daily timeframe remains above its 200-day simple moving average at $0.7295, the overall trend pointing lower and weekly price dropping from prime resistance at $0.7849-0.7599 indicates sellers may remain at the wheel. Consequently, further selling below H1 resistance at $0.7424 could be seen, targeting at least $0.74 (and daily support structure). Any downside beyond $0.74 shines light on H4 Quasimodo resistance-turned support at $0.7349.
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