The Australian dollar versus the US dollar currency pair dropped until the 0.5511 level. The bulls may have some reasons to keep a close eye.
The fall that commenced after 0.6700 was confirmed as resistance continued and went as low as 0.5511. After touching the level, it retraced strongly, almost reaching the 0.6015 level.
It can be considered that the price is now in the middle of a possible range, limited by the resistance of 0.6015 and the support of 0.5511, respectively.
Of course, as long as the resistance is confirmed, the bears would be entitled to short the market, targeting the support level. The bulls may also be tempted to long the market from the support area, being attracted by previous the strong retracement. However, as the market is still strongly bearish, the bulls might be thinking that it is a good idea to lower their risks.
But, if the support area — 0.5511 — is falsely pierced, then the buyers could have more confidence and even hope for a piercing of the resistance — 0.6015.
Irrespective of the false piercing of the support area, if the resistance region gets punctured, then the next bullish objective may very well be the double resistance made possible by the 0.6313 level and the lower line of the descending channel.
If the double resistance area gets to keep this role, then the price could revisit 0.6015. As it is expected for the bears to be packed around this double resistance area, it is possible to see 0.6015 giving way and leading the price towards 0.5511.
However, if the double resistance gets invalidated, then 0.6500 is the prime bullish target.
The price is in a descending trend. The current phase is a correction that started from the low of 0.5506.
Something that is to the bullish liking is that the next low after 0.5506 — which confirms 0.5666 as support — is a higher low.
But as long as the price sits under the double resistance etched by the level of 0.5967 and the trendline, further movement towards the south is possible, a first aim being 0.5666, followed by the low of 0.5506.
On the other hand, if the bulls manage to confirm the double resistance as support, then 0.6231 is exposed.
Levels to keep an eye on:
D1: 0.6015 0.5511 0.6313 0.6500
H4: 0.5967 0.5666 0.6231 and the low of 0.5506
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