Refreshing multi-year lows at 0.6266, the Australian dollar ceded ground vs. the US dollar Thursday, down more than 170 points, or 2.6%. The US dollar is the world’s reserve currency; therefore, it tends to benefit when markets exhibit panic.
The 0.63 handle on the H4 timeframe is in motion, but displaying limited sign of bullish intent. The relative strength index (RSI), for those who follow momentum oscillators, will note the indicator dipped into oversold territory yesterday, reaching bottoms around 22.00.
Daily support at 0.6301 made an appearance, though like 0.63, shows little sign of future recovery. Of interest is the weekly timeframe, recently penetrating support at 0.6359, revealing downside potential to as far south as support registered at 0.6101, which also denotes the next downside support target on the daily timeframe, too.
According to the primary trend and higher-timeframe structure, the outlook is not bright for AUD/USD.
H4 price closing beneath 0.63 today likely trips sell-stops from those long the round number, and draws in breakout sellers, targeting at least 0.62. The ideal scenario would be for a daily close to form beneath daily support at 0.6301, followed up with a retest at 0.63 on the H4 in the shape of a H4 bearish candlestick signal. Entry/risk can then be calculated based on this signal, with downside objectives set at 0.62, and then, with a little bit of oomph, weekly support priced in at 0.6101.
Disclaimer: The information contained in this material is intended for general advice only.