With AUD/USD wiping out its previous week losses and closing lower on a bearish engulfing candle pattern (top reversal signal), risk of further weakness is expected. This is coming on the back of a loss of upside momentum at the 1.1009 level.
Guest post by www.fxtechstrategy.com
With that said, risk of further weakness points lower towards the 1.0444 level, its April 19’2011 low with a turn below that level paving the way for more weakness towards the 1.0388 level, its April 12’2011 low. This level should provide a strong support if tested and turn the pair back up in the direction of its primary trend.
Alternatively, for AUDUSD to re-establish its long term uptrend now on hold it has to break and close above the 1.1009 level. This will put the pair in a position to strengthen further towards the 1.1100 level and then the 1.1200 level, its psycho levels. The psycho levels are necessary as overhead resistance levels are absent.