Bottom line: AUDUSD might have carved a potential low around 0.6581 levels and a break above 0.6750 would confirm the same. A drop below 0.6581 levels would find support around 0.6530.
Technical Analysis:
AUDUSD bears might have carved a potential bottom at 0.6581 lows on February 23, 2020 and a rally past immediate resistance at 0.6750 would confirm that bulls are back. Also note that prices would then break into the buy zone of the resistance trend line and a break above 0.6750 would then give us Wave 1(potential impulse) to be worked upon. Continuing our discussions from last week the entire drop since 0.7032 seems to have unfolded into an A-B-C, and could be a part of the larger diagonal structure. If the entire drop is Wave 5 within the diagonal, AUDUSD rally from here should ideally take out 0.7032 levels, before producing any meaningful correction lower again. A Fibonacci 0.618 extension of Waves 1 through 3 within Wave C was seen around 0.6588 levels (not seen on chart here). The AUDUSD has managed to find support from 0.6581 levels so a minimum criteria required for a bullish reversal has been met and we need to see a follow through rally taking out resistance at 0.6750, to confirm. Most aggressive traders might be willing to initiate long positions at current price (0.6596), with protective stops below 0.6570 and potential target as 0.6750 in the short term. Please note that even if AUDUSD break below 0.6581 lows, the drop would be shallow and bulls are expected to be back round 0.6550/30 levels going forward. Conservative traders might want to remain flat for now and allow prices to break into buy zone and also take out 0.6750 resistance. It might be considered safe to buy initiate longs on dips thereafter.
Prepared by
Harsh Japee, Technical Analyst.
AUDUSD Chart
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