The Australian dollar versus the US dollar currency pair is at the resistance area of the daily descending channel. But why does it seems that something is not in place?
After bottoming at the 0.6700 psychological level, the price entered in an ascending movement that extended until 0.6938.
By doing so, it pierced the resistance trendline of the descending channel. However, the break was rendered as a false one after the price went back under the line on December 16.
An expected outcome of such an event would be a strong decline and thus a new impulsive swing for the descending trend. Even if it can be said that a depreciation actually commenced, the fact that it stopped at the major support of 0.6850 raises some questions regarding the strength of the bears.
An alarming sign for the bears is also the fact that the price was repelled by 0.6850 with so much force that the resulting appreciation took off the table the gains that they made on December 17.
The price is now, yet again, at the resistance trendline. But as the bears already failed once, the bulls have reasons to challenge them with all their confidence.
As a result, one possible result is a second confirmation of 0.6850 as support, a scenario which will facilitate a second piercing of the trendline that, this time, is to be followed by the departure of the price from it.
A second possibility — even if it can be viewed as an extension of the first scenario — is the one in which the price falsely pierces 0.6850 and then appreciates strongly towards the main target, which is represented by 0.7013.
Only if the bears manage to turn 0.6850 into resistance, then the target would be 0.6800, followed by 0.6700.
From the Fibonacci projection of 23.6, the price is in an ascending movement that — for the time being — topped at the 61.8 level.
The price now oscillates above the 50.0 projection. As long as it holds as support, further advancement towards 61.8 (with its 0.6933 technical correspondent) is in the cards.
Another possibility is a retest of 0.6855 followed by a recovery above 50.0, with the main 61.8 as a target.
Levels to keep an eye on:
D1: 0.6850 0.7013 0.6800 0.6700
H4: 0.6933 0.6855 and the Fibonacci projections of 23.6 50.0
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