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AUD/USD Could Decline Further

May 13, 2022

  • AUD/USD started a fresh decline from above the 0.7250 level.
  • Descending channel has formed support near 0.6750.

The Australian Dollar, US Dollar pair corrected higher after testing support near 0.7050. AUD/USD then found strong resistance near 0.7250 and the 100-MA (red).

AUD/USD 4-Hour Chart (Trend: BEARISH)

On the 4-hour chart, the AUD/USD pair started its recent decline after testing resistance from the 100-MA (red), which is also close to the 0.7250 level. The quote broke below support at 0.7050, dropping as low as 0.6830 before taking a pause near 0.6880. The quote has continued to trade well below both the 100-MA (red) and 200-MA (blue). 

For the pair to turn bullish, the quote will first need to test resistance near 0.6900. Above this there is further resistance near 0.7050, which is also close to the 50% Fibonacci retracement level of the downward move from the swing high of 0.7266 to the swing low of 0.6828. Further gains could see the quote test resistance near 0.7100 and the 100-MA (red).

In contrast, if the pair continues bearish, the quote will first need to test support near 0.6850. Below this there is further support near 0.6800 and the lower trend line of the descending channel. Further losses could see the quote drop down as far as 0.6750, a level last seen in June 2020.

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