AUD/USD Tumbles Below An Upside Support Line

AUD/USD tumbled today, breaking below the upside support line taken from the low of November 29th. The slide also brought the rate below three support (now turned into resistance) barriers and now looks to be headed towards the 0.6860 zone, marked by an intraday swing low formed on December 19th. Combined with the fact that the rate is also trading below a downside line drawn from the high of December 31st, the fall below the aforementioned upside line may have turned the short-term outlook to negative.

As we already noted, the bears now look to be headed towards the 0.6860 zone, the break of which may extend the slide towards the lows of December 17th and 18th, at around 0.6840. Another break, below 0.6840, could carry larger bearish implications and may set the stage for declines towards the low of December 11th, at around 0.6805.

Shifting attention to our short-term oscillators, we see that the RSI stands below 30 and points down, while the MACD lies below both its zero and trigger lines, pointing south as well. These indicators detect strong downside speed and corroborate our view that this exchange rate may continue drifting lower.

On the upside, we would like to see a strong break above 0.6965, before we start examining the bullish case. Such a move would also bring the rate back above both the pre-mentioned upside and downside lines, and could allow the bulls to drive the battle near the 0.7000 figure, at 0.7003, which is marked by an intraday swing high formed on January 2nd. If they are willing to overcome that zone as well, then we may see them putting the 0.7030 zone on their radars. That zone is marked as a resistance by the high of December 31st.


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