Review and dynamics
The USD dominates in the currency market today, after yesterday’s release of the minutes of the Fed meeting in April. The Australian currency is under pressure from several fundamental factors (see “Fundamental analysis). Since the beginning of May the pair AUD/USD has lost over 400 points. The decline in the pair AUD/USD continues.
The pair has broken important support level of 0.7445 (Fibonacci 23.6%), 0.7415 (ЕМА200, ЕМА144 on the daily chart) and is traded near support level of 0.7200 (lower limit of the ascending channel on the weekly chart).
The decline in the pair AUD/USD is likely to continue. On the weekly, daily and 4-hour charts the indicators OsMA and Stochastic suggest to open short positions.
Since this January the pair has been undergoing correction in the ascending channel on the daily chart and the pair AUD/USD has grown by 14% up to 0.7820. RBA’s decision to reduce interest rate was the first factor that triggered downtrend in the pair.
At the moment the pair is below the level of 0.7415.
If the pair goes back above the level of 0.7445 we can consider opening medium-term long positions
In this case the pair AUD/USD may go up in the ascending channel on the daily chart with the upper limit at 0.7820 (Fibonacci 38.2%), 0.7900 (highs of February and March 2015) and 0.8130 (ЕМА144 on the daily chart and Fibonacci 50%).
Short positions are preferable.
Support levels: 0.7200, 0.7140, 0.7100 and 0.7000.
Resistance levels: 0.7305, 0.7365, 0.7415 and 0.7445.
Sell on the market. Stop-Loss: 0.7260. Take-Profit: 0.7140, 0.7100 and 0.7000.
Buy Stop: 0.7310. Stop-Loss: 0.7260. Take-Profit: 0.7415, 0.7445, 0.7500, 0.7545 and 0.7600.
Break out of important support levels
The price is at the bottom line of the channel