There has been a decent fall in the AUD/USD pair after it hit the critical resistance level at 0.81219. From that level, the pair started its bearish rally and lead toward the critical support level at 0.70454. Though this level provided some initial bullish support to this pair the bears managed to break this level. Prior to the closing of the trading daily candle, the bulls quickly regained its control over the market and formed a decent bullish pin with a false break below the crucial support level at 0.70454. The aggressive price action traders have already gone long in the AUD/USD pair with the formations of the bullish candlestick but the conservative traders are still waiting for a minor pullback so that they can place the trade with tight stop loss.
Figure: False break of the critical support level at 0.70454
From the above figure, you can clearly see the bears have failed to retain the control after it hit the major support level at 0.70454. However, we had a nice touch down of the major support level at 0.68226 which clearly suggest the recent bearish fall is near its end. According to the leading analyst of the professional Forex broker, the pair might start its bullish correction from this level before it attempts for another bearish rally.
The first initial bullish target for this pair lies at 0.72568. This level is also reinforced with the 38.2% Fibonacci retracement level drawn from the high of 21st January 2018 to the low of 30th December 2018. A daily closing of the price above the major resistance level at 0.72568 will eventually lead this pair towards the 50% bearish retracement level. Any bearish price action confirmation signal near the 50% bearish retracement level will be an excellent opportunity to execute short orders. On the contrary, a clear break of the price above the major resistance level at 0.74376 will eventually lead this pair towards the 61.8% bearish retracement level. This level is going to play a crucial role since a daily closing of the price above that level will confirm the end of current bearish retracement of this pair. On the other hand, any bearish price action near the 61.8% bearish retracement level will be an excellent opportunity to execute fresh short in favor of the long term bearish trend.
Fundamental Factors
The recent performance of the U.S economy is not up to the market and most of the leading investors are cautiously waiting for the FED rate hike decision. Any hawkish statement from the FED officials regarding their interest rate will definitely push the AUD/USD pair lower in the global market. On the contrary, a dovish statement will refuel the AUD/USD bulls which will eventually push the pair higher in the global market.
Regarding the Aussie economy, the retail traders are cautiously waiting for the scheduled speech from the RBA governor. Any hawkish statement in the Friday morning trading session will definitely push the Aussie dollar significantly higher. On the contrary, a dovish statement regarding their rate-cut decision will create massive clouds of confusion into the mind of long term investors. But the recent employment change data release for the Aussie economy was significantly better which gives a decent hope to the AUD/USD bulls. However, the unemployment rate data remain unchanged and this might create an adverse effect for the Aussie bulls.
Considering the technical parameters, the AUD/USD pair is now in the recovery phase and it needs minor bullish correction before it can go for another dive. Moreover, the fundamental factors are also in favor of the Aussie economy, which means, we have a higher chance to see a bullish rally in the AUD/USD pair. So any bullish price action confirmation signal will be an excellent opportunity to make some quick profit on the corrective market movement.