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Forex Flash: AUD/USD break below 1.01 could trigger ‘range flip’ - ANZ

FXstreet.com (Barcelona) - The AUD/USD closed sharply lower today, down 48 pips at 0.9953. This was the lowest daily close the pair has seen since June 2012, and could be a sign of further declines to come.

According to Tim Riddell, Head of Global Markets Research, Asia at ANZ, “The favoured long-term profile for AUD/USD is that a structural top was made in 2011 on the push to 1.1075-85. Price action since then has been contained within relatively tight parameters, especially when considering the extent of AUD gains from its 2001 low of 0.4775 and the crisis slump to test 0.60, which again suggests that a long-term consolidation pattern is developing.”

He went on to add, “Despite a series of attempts to push towards an area considered to be a “squeeze extreme” (in the1.08’s), the persistent failure to hold above 1.06, left AUD/USD within an effective 1.01-1.06 range. The relatively dynamic and aggressive break of range support in early May has already triggered a test of the deep (61.8%) retracement of the price action seen since June 2012’s spiked low (0.9580). The impulsive style of this lower break suggests a full range flip,mirrored through 1.01, to retest the 0.9580 spiked low. “

In conclusion, he commented “Interim bounces through 1.0030 could see a mild consolidation into the 1.0070-1.0110 area, but only a surge above 1.0155 could undermine the current bias for a full technical range flip to 0.9580-0.9600.”

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