Forex Investment and Currency Trading

• AUD-USD is still expected to trend higher towards 0.72+
• A very slow basing pattern is under way, with 0.6245/0.6010 key support holding
• Technically, clients should be small long and add on an upside break of 0.6629

The AUD-USD pullback in early March found support ahead of the critical 0.6245 area, with buyers driving spot above 0.65 again. This is still seen as part of a basing pattern, which is taking time to unfold. On a trend basis, AUD-USD is above the 20-day moving average (MA) at 0.6455, but is below the 60-day MA at 0.6629. A turn above the latter is expected over the coming sessions, which should confirm a turn towards the potential double bottom midpoint at 0.7270. Support and risk for near-term AUD-USD bulls is best kept at 0.6245, as a turn below this area would leave 0.6010 at risk and lower.

The AUD-USD 50-week momentum indicator continues to rise and is expected to support a basing pattern. The 13-week MA at 0.6648 is expected to come under further pressure, which should leave the 50-week MA at 0.7914 to attract after this. The double-bottom midpoint at 0.7270 will be critical to recover in order to confirm a turn in the trend and would target 0.8300 on a simple extension measure. Fibonacci ratio retracement studies target 0.7473, the 38.2% retracement of the fall from the 0.9849 high, ahead of the 50% retracement at 0.7926. Support at 0.6245/0.6010 is important to hold in order to keep the focus on a basing pattern forming, as a slide through support would leave the 2001 low at 0.4775 attracting.

Strategy

AUD-USD is expected to trend higher towards 0.7270/0.7473 over the next three months. Technically, you should cut all AUD-USD short positions and go small long as the basing pattern continues to unfold. An upside break of 0.6629 would confirm a double bottom, at which point you should add to longs.