AUD/USD Could Extend Downside Correction To 0.705023 January, 2019 by Aayush Jindal in Market Analysis
- The Aussie Dollar started a downside correction after trading as high as 0.7235 against the US Dollar.
- There was a break below a key contracting triangle with support at 0.7155 on the 4-hours chart of AUD/USD.
- The US Existing Home Sales declined 6.4% in Dec 2018 (MoM).
- The Euro Zone Consumer Confidence for Jan 2019 (Prelim) will be released today, which could decline to -6.5 from -6.2.
AUDUSD Technical Analysis
After a solid uptrend, the Aussie Dollar faced sellers near the 0.7220-0.7240 area against the US Dollar. As a result, the AUD/USD pair started a downside correction and declined below 0.7200 and 0.7150.
Looking at the 4-hours chart, the pair traded as high as 0.7235 and later declined steadily and slowly. Sellers pushed the pair below the 0.7150 support and the 200 simple moving average (green, 4-hours).
There was a break below the 76.4% Fib retracement level of the last wave from the 0.7116 swing low to 0.7235 high. More importantly, the pair traded below a key contracting triangle with support at 0.7155 on the same chart.
It has opened the doors for more declines below the 0.7116 swing low and the 0.7100 level. The next stop could be the 1.236 Fib extension level of the last wave from the 0.7116 swing low to 0.7235 high at 0.7088. However, if sellers remain in action, the pair might even test the 0.7050 support area.
On the upside, the previous supports near 0.7150 and 0.7160 along with the 200 simple moving average (green, 4-hours) are likely to act as resistances for buyers in the short term.
Fundamentally, the US Existing Home Sales report for Dec 2018 was released by the National Association of Realtors. The market was looking for a 1.2% decline in sales Dec 2018, compared with the previous month.
The actual result was well below the market forecast as the US Existing Home Sales declined 6.4%. On the other hand, the last reading was revised up from 1.9% to 2.1%.
Economic Releases to Watch Today
- Euro Zone Consumer Confidence Jan 2019 (Preliminary) – Forecast -6.5, versus -6.2 previous.
- Canadian Retail Sales Nov 2018 (MoM) – Forecast -0.6%, versus +0.3% previous.
- Canadian Retail Sales ex Autos Nov 2018 (MoM) – Forecast -0.4%, versus 0% previous.