The AUD/USD currency pair has broken out of the rising channel it had been trading within for some time. This technical development suggests a potential shift in the short-term trend from bullish to bearish.
Breakdown from the Channel:
- The AUD/USD has fallen below the support line of the rising channel, indicating a break in the uptrend.
- This breakdown has led to a decline towards the initial downside target based on the Fibonacci retracement of the channel’s height.
Technical Analysis Implications:
- Downside Targets: If the price falls below the recent low of 0.6592, it could confirm the bearish trend and potentially reach the next target zone around 0.6550-0.6580, where the 200-day SMA is located.
- Fibonacci Retracement: The Fibonacci retracement level of 0.618 is currently acting as a support level, but a break below this level could trigger further downward movement.
Possible Scenarios:
- Bearish Continuation: A decline below 0.6592 could lead to a continuation of the downtrend towards the 0.6550-0.6580 zone.
- Bullish Reversal: Conversely, a recovery above the May 23rd high of 0.6653 could signal that the uptrend remains intact and the AUD/USD might climb higher.
The breakout from the rising channel is a bearish technical signal for the AUD/USD in the near term. However, the direction will ultimately depend on whether the price breaks below the 0.6592 support level or manages to recover above the 0.6653 resistance level. Monitoring these key levels and any further developments in the market is crucial for gauging the AUD/USD’s future direction.