Bottom line: AUDUSD bullish structure remains intact until prices stay above 0.5505 over long term. The corrective drop discussed earlier might be complete around 0.6250 levels as bulls prepare to push higher towards 0.6700/0.6800 levels.
Fundamental Outlook:
Dow Jones along with SPX500 and NASDAQ had slipped by over 2% yesterday and closed just around 23000 mark. The historic drop in Oil prices on Monday had fueled the slide in indices globally. Meanwhile, another stimulus of over $484 billion has been announced by Fed yesterday. It remains to be seen if this could help boost investor/trader sentiment. Dow is seen trading around 23170 at this point and a push above 24400 could test 25300.
Oil prices continue to slide with Brent Crude dropping over 24% yesterday and closing below $20/barrel. The unscheduled OPEC+ meeting held yesterday remained inconclusive of further measures, as U.S remains committed to check further slide. Brent trades 16.00% lower at this point around $16.54/barrel.
Technical Analysis:
AUDUSD is moving in perfect tandem as the corrective drop might be complete around 0.6250 lows print yesterday. AUDUSD trades above 0.6330 levels at this point and bulls seem to be poised to rally towards 0.6700 and 0.6800 levels. A push above the 0.6400 mark would instil confidence for a meaningful low in place at 0.6250.
Last week, we had discussed probabilities for a corrective drop after AUDUSD reached 0.6443 levels. The currency pair has dropped towards fibonacci 0.236 retracement around 0.6250/60 levels. Ideally, the correction should find support around fibonacci 0.382 retracement but at times it could be shallow.
Either way, AUDUSD bulls are expected to be back in control from current price levels (0.6330) or slight lower from 0.6150 respectively. A consistent push above 0.6400 levels would be constructive for bulls to continue further.
Most traders might be willing to initiate fresh long positions from here and add further if prices drop towards 0.6150 levels. Protective stops might be placed around 0.5900 levels, with target towards 0.6700 and 0.6800 respectively.
Prepared by
Harsh Japee, Technical Analyst.
AUDUSD Chart
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