AUD/USD is below the dominant trendline but longs are in the market as per the past prior days of trade and inside bars of the Wednesday bullish candle and breakout. The following illustrates prospects, however, of a correction into those longs across the daily, 4-hour and hourly timeframes.

The price broke out of the micro trend and made a subsequent rally into the resistance of the more dominant bearish trendline. We have seen a correction into support.

This support could be significant and result in a retest higher into shorts that sold the break of the micro bullish trend that would now be expected to act as a counter trendline.

The support is made up of September lows, last Friday's lows and prior resistance such as the prior week's high. Last week's high, however, is where the bulls need to be. At this juncture, while on the backside of the trend, the bias is to the downside on a break of 0.6350.

With medium-term momentum staying bearish, we look for a fall to the 78.6% retracement of the 2020/21 uptrend and the low from April 2020 at 0.6041/5978 after the pause. Whilst we would not rule out another short pause here, a convincing break lower would raise a prospect for a move all the way to 0.5506 – the low of 2020

In a case where AUD/USD buyers keep the reins past 0.6550, the mid-September highs near 0.6770 could gain the market’s attention ahead of the previous monthly peak of 0.6915. If the quote remains firmer past 0.6915, the 0.7000 psychological magnet will be crucial to track.

Breakout from the TL is a bullish signal for securing positions

Oct 30 2022