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AUD/USD Price Analysis: Fresh lows, channel support tested, Golden Ratio in focus

  • Bears taking out the H&S neckline, target channel support/uptrend at 0.6829.
  • Failures of the channel opens risk to 61.8% Fibo and then 0.6755 November low. 
  • Bulls need the golden ratio to hold or its probably game over to the 0.66 handle. 
  • Risk-off mood in Asia not helping bull's case ahead of key data releases and expected rate cut from a dovish RBA.

AUD/USD daily chart

It was not a good day for the Aussie bulls overnight and commitments were lost at the H&S neckline. Subsequently, the price closed on a daily closing basis below the neckline and marked a fresh closing low for the year down at 0.68427.

In Asia, the pair has slipped further to a low of 0.6832 as bears milk the bearish environment on both a fundamental and technical basis ahead of the jobs data tomorrow, Consumer Price Index at the end of the month and the Reserve Bank of Australia meeting on the 4th Feb. 

As the attached chart shows, the price is headed for a test of the channel support. On a weekly basis, 0.6937 was the June 2019 level, so this should reinforce the channel. However, below there, bears can target the golden ratio as the 61.8% Fibonacci retracement target which will be expected to hold the initial tests. A subsequent break there will be game over the committed bulls and 0.66 will be on the cards. First support may come in at the 0.6755 November low ahead of the target the 0.6671 October low

However, should there be a firm hand from the bulls at either the channel support or 61.8%, a structural bullish case could be made for a restest of the channel and prior support of the H&S neckline and 0.6880 prior resistance. On a subsequent break, bulls will be back in the picture for a more balanced bias and the upside of the channel will be back in vogue. 

 

 

 

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