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AUD/USD Price Analysis: Bounded by support and resistance, watch for breakout

  • AUD/USD bears facing a strong level of the support structure.
  • Price is trapped and swing traders await a breakout. 

AUD/USD has been in the hands of the bears since the end of August and following five consecutive months of higher highs and lows. 

A deeper correction to a 38.2% retracement level brings in the 0.67 area, but there is a fair bit of significant support structure for bears to overcome first.

Additionally, net long AUD positions have bounced back modestly after plunging while net USD positions have fallen back into red amid growing market optimism that another fiscal package will be agreed by US policymakers.

Nevertheless, the following is a top-down analysis that illustrates how the price is bounded on the daily chart by support and resistance and where weekly support makes it a problematic journey to the monthly target. 

Monthly chart

The monthly chart shows that the price is in a phase od distribution and the 38.2% Fibonacci retracement level is still some way off. 

Weekly chart

The weekly chart is clear. The price is supported at a key structure which is problematic for the bearish case. 

Daily chart

There is little that can be done from a swing trading perspective all the while that the price is bounded by support and resistance on the daily time frame.

Swing traders will be open to opportunities once the price has broken to either the upside or, more preferably, to the downside that coincides with the medium-term bearish analysis.

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