AUD/USD price analysis: breaks the wedge to the downside

AUD/USD price analysis: the wedge breakout offers a downward bias. However, there is scope for a mild correction to sell into

AUD/USD price analysis                                 

Market highlights from the last week

Tuesday 2 June: Australian data beat market expectations with AUD/USD at 5-month highs before a correction.

Wednesday 3 June: Overall confidence in a global economic recovery continued to drive markets on Wednesday.

Thursday 4 June: AUD/USD approached the 0.7000 key level as the US dollar lost ground despite continued underlying pressure for a correction.

Friday 5 June: CFTC data recorded no decline in short Australian dollar positions, maintaining the potential for short covering.

Monday 8 June: Commodity currencies made further net gains on optimism over a global recovery, but retreated from their best levels with AUD/USD selling above 0.7000.

AUD/USD price analysis

Let us have a look at the technical viewpoint: 

Monthly: Traded to a multi-year low of 0.5506 in March. We have seen two months of net gains in April and May. The trend of lower lows at 0.6920. 

Weekly: Previous resistance seen at 0.7032 (week 30th of December).

Daily: Trading at overbought extremes. Rallies are starting to attract sellers. The 261.8 per cent extension is not seen until 0.7359 (from 0.5506-0.6214). Support is seen at 0.6790.

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Intraday 1-hour: Broken out of the wedge formation to the downside. Intraday signals are at oversold extremes. Reverse trend line resistance is located at 0.6993. Taking a 261.8 per cent extension from current levels (0.6778) lines up closely with the aforementioned support at 0.6790. 

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Outlook: The wedge breakout offers a downward bias. However, there is scope for a mild correction to sell into (retest of the wedge)

Possible trade setup: 

Action: Selling at 0.6990

Stop: 0.7030

Target: 0.6790

Potential return on risk to first target: R5 (reward 200 / risk 40)

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Australian Dollar / US Dollar
Daily change
0.68042
Low: 0.67903
High: 0.68499
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