The AUD/USD pair failed to clear the major resistance level at 0.81127 and formed a triple top pattern in the weekly chart. From that level, the sellers took control over the market and pushed the pair towards the major support level at 0.70271. Though the 100 weekly SMA at 0.76342 tried to provide some fresh buying momentum, the aggressive sellers cleared the support level with the extreme level of ease. Most of the professional price action traders are cautiously waiting for a bullish price action confirmation signal near the current support level at 0.70271. Any bullish price action confirmation signal will be an excellent buying opportunity with an initial target at 0.74438. On the contrary, a weekly closing of the price below the current support level will result in a sharp decline.
AUD/USD technical chart analysis
Figure: AUD/USD testing the major support level
From the above figure, you can clearly see the sellers are slowly losing their momentum near the critical support level at 0.70271. Though the recent trend of the AUD/USD pair is strongly bearish, the professional traders in the CFD trading industry expect a bullish correction from this level. Clearing the current support level will be extremely hard since we have plenty of supportive candles just below this level. Moreover, we have nice doji in the weekly chart right at the critical support level at 0.70271, which strongly indicates a potential bullish reversal. The first initial bullish target for this pair is the 38.2% bearish Fibonacci retracement level. From this level, we might see some selling pressure, but a daily closing of the price above the 38.2% Fibonacci retracement level will eventually lead this pair towards the 61.8% bearish retracement level. Any bearish price action signal near the critical resistance level at 0.77062 will be an excellent opportunity to execute short orders. However, a clear break of the 61.8% retracement level will confirm the end of recent bearish retracement of the AUD/USD pair.
On the downside, we need to break below the current support level at 0.70271 to see some fresh selling momentum. The first initial bearish target for this pair lies at the low of 10th January 2016. The crucial support level at 0.68313 is going to provide strong support to this pair. We might see some ranging market once the price hit that level. A weekly closing of the price below the critical support level at 0.68313 will eventually lead this pair towards the next major support level at 0.65890. Though we have plenty of supportive candles right at this level but a dive to such extent is most likely to force this pair towards the key support level at 0.62650.
Fundamental factors
Fundamentally the recent performance of the Aussie economy is not up to the mark. Moreover, due to the holiday season, the market volatility is expected to be very low till the end of this week. However, on Friday we have NFP data release for the U.S economy and a strong positive data release is most likely to push the AUD/USD pair significantly lower. On the contrary weak data, the release will refuel the Aussie bulls and push the pair higher from the current support level. Most of the leading investors will also be looking for the average hourly income data release in the U.S economy as it acts as a leading fundamental indicator. But a strong data release in the average hourly income followed by weak NFP data is most likely to mitigate the market volatility. The market is most likely to gain its momentum starting from the next trading week as more traders will join after spending a decent holiday. Considering the technical and fundamental factors, the bulls are most likely to take control of this market during this holiday season. So any bullish price action confirmation signal will be an excellent opportunity to execute long orders.