The AUD/USD pair is currently experiencing a pullback within a short-term downtrend, indicating a reversal in the trend from its previous highs on August 29. This shift is evident in the sequence of falling peaks and troughs, suggesting that the trend has now turned bearish. In line with the cornerstone principle of technical analysis that “the trend is your friend,” the current outlook suggests further downside movement in the near future.
After bottoming at 0.6685 on September 4, the AUD/USD pair has been in a counter-trend reaction, pulling back higher. However, this correction appears to be shallow and is likely to lose momentum soon. Once the correction exhausts itself, bears are expected to exert pressure, pushing the price lower in alignment with the overall downtrend. A break below the 0.6685 low would confirm the continuation of the downward trajectory, with potential targets at 0.6645 and 0.6587, the Fibonacci 0.50 ratio retracement level of the August rally.
The current 4-hour chart for AUD/USD highlights the downward trajectory of the pair, reinforcing the bearish sentiment. With the trend favoring further downside movement, traders are advised to exercise caution and consider short positions in anticipation of lower lows. The technical indicators and price action signal a high probability of the downtrend persisting, making it essential for traders to align their strategies accordingly.
In light of the prevailing market conditions, it is crucial to monitor key support and resistance levels for the AUD/USD pair. By identifying critical levels such as 0.6685 and potential targets like 0.6645 and 0.6587, traders can effectively plan their trades and manage risks. Additionally, keeping a close eye on price action and technical indicators will provide valuable insights into the market sentiment, enabling traders to make informed decisions based on the prevailing trends.
As the AUD/USD pair continues on its downward trajectory, traders should remain vigilant and adapt their strategies to the evolving market conditions. By staying abreast of key developments and technical signals, traders can effectively navigate the volatility and uncertainty in the forex market. With a disciplined approach and a thorough understanding of the prevailing trends, traders can capitalize on opportunities and mitigate risks, ensuring a successful trading experience in the AUD/USD pair.
