AUD/USD dropped to as low as 0.7151 last week. The development confirmed completion of corrective rebound from 0.7020 at 0.7393. Initial bias stays on the downside this week for retesting 0.7020 low first. On the upside, though, break of 0.7246 resistance will delay the bearish case and turn bias back to the upside. Rebound from 0.7020 could probably head to 38.2% retracement of 0.8135 to 0.7020 at 0.7446 before completion.
In the bigger picture, a medium term bottom is in place at 0.7020 ahead of 0.6826 key support (2016 low). Stronger rebound could still be seen to correct the whole fall from 0.8135 high. But we’d expect strong resistance from 0.7500 support turned resistance to limit upside. Medium term fall from 0.8135 should resume later and extend to take on 0.6826 low at a later stage, after the correction from 0.7020 completes.
In the longer term picture, the corrective structure of rebound from 0.6826 (2016 low) to 0.8135, and the failure to break 38.2% retracement of 1.1079 (2011 high) to 0.6826 at 0.8451, carry bearish implications. AUD/USD was also rejected by 55 month EMA. Now, the down trend from 1.1079 is in favor to extend. On break of 0.6826, next target will be 61.8% projection of 1.1079 to 0.6826 from 0.8135 at 0.5507.
