audusd retreats back into bearish range pattern 1587692015

June 19, 2015 – AUD/USD has retreated back into the tight trading range that has been in place since the beginning of June. This pullback on Friday follows Thursday’s surge that was prompted by moderate US dollar weakening post-FOMC.

Early Friday saw the US dollar regain some of its strength as it helped push AUD/USD back down into its previous range after the currency pair had been unable to rise above 0.7850 on Thursday.

Having eased back into this range and below 0.7800 once again, AUD/USD continues to display a clear bear flag pattern that hints at further potential downside. The upper resistance border of this inverted flag closely follows the 50-day moving average, while the lower support border is a short, rising trend line from the beginning of June.

From a broader perspective, the longer-term trend also remains significantly bearish in line with the prevailing downtrend that has been in place for the past year, which saw a sustained plunge from the 0.9500-area high in July of 2014.

The 200-day moving average has served as a major resistance factor for this longer-term downtrend (most notably at AUD/USD’s mid-May peak), while the 50-day average is currently serving as resistance for the shorter-term flag pattern.

A break below 0.7700 followed by a subsequent break below this flag pattern would confirm the prevailing bearish bias. In that event, the next major downside target remains at the key 0.7500 level, which is just slightly below the five-year low of 0.7532 that was established in early April.