The market has reversed sharply from the key .7816 April 2018 high AUDUSD saw a sharp fall in early trading today back to the 13-day exponential average, currently at .7690, which ideally continues to hold to see the market shift into a high-level range, before the uptrend eventually resumes. However, we acknowledge that the risk of a deeper pullback remains high (see below), in particular as daily MACD momentum is breaking lower, and we therefore stay on a cautious footing. With the core uptrend remaining intact at present though and with a large “head and shoulders” base still in place, we see resistance initially at.7731, then .7799. Removal of here would open the door to another test of the pivotal April 2018 high at .7816, where we would expect to see initial sellers at first to maintain a new range. Beneath .7690 would instead confirm a deeper correction lower, with support seen initially at .7661, then more importantly at.7643, below which would trigger a small top. Beyond here would see a fall back to.7603/.7599, where an initial hold is expected. Further near-term sideways trading is expected at this stage below the key .7816 resistance.
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
