The Australian dollar versus the US dollar currency pair was not able to maintain its ground above 0.6850. As a consequence, the south is the current destination, unless 0.6850 was only falsely pierced.
After the confirmation as support of the 0.6700 psychological level, the price unleased a strong bullish profile, one that was able to pierce and depart from the resistance line of the descending channel, extending until the 0.7013 level.
But the moment that the bulls should have cheered became one that shifted their entire perspective, as the retracement that came after touching 0.7013 was very articulated.
However, the buyers tried to maintain their optimism. That can be seen in the fact that even after the drop from 0.7013, they managed to confirm the double support crafted by the upper line of the descending channel and the 0.6850 level. The confirmation led to an appreciation that, unfortunately for those longing the currency pair, peaked at 0.6933.
And this is how the sequence of events that was to facilitate further depreciation was put into place. Basically, the strong retracement from 0.7013, alongside with the peaks of 0.6938 and 0.6933, respectively, etch a head and shoulders pattern.
The last part of the aforementioned sequence was played as the price pierced the neckline of the pattern, a neckline that — coincidentally — is also a major support.
So, as the major support of 0.6855 gave way and also as the price reentered into the descending channel, the bears have reasons to be cheerful for.
As long as the bulls do not reconquer 0.6850, the main target is 0.6700. Of course, along this path, 0.6800 plays the role of a first intermediate profit booking area, while the second one belongs to the area that corresponds to the 0.6753 low.
The drop that started after the price was not able to maintain the gains above 0.7003 was limited by 0.6855. From there, the bulls pushed the price towards the north, but could not pass 0.6933 — which also corresponds to the 61.8 Fibonacci retracement projection.
This triggered a new downwards leg, one that confirmed 50.0 as resistance and tries to do the same to 38.2.
As long as the bulls do not manage to take control of the 50.0 level, further depreciation is to be expected, a first target is such a context being 23.6.
Levels to keep an eye on:
D1: 0.6850 0.6800 0.6700
H4: 0.6855 and the Fibonacci retracement projections of 50.0 23.6
If you have any questions, comments, or opinions regarding the US Dollar, feel free to post them using the commentary form below.