AUDUSD Faces Resistance At 0.7065/70

16 July 2020

AUDUSD might be preparing to turn lower towards 0.6530 and lower levels, after having touched 0.7040 levels overnight. The currency pair had managed to rally alongside Global Indices yesterday but bears seems to be back in control soon.

Immediate resistance is seen around 0.7060 levels and AUDUSD should remain below that mark to hold the above bearish structure. Having said that, any break higher would be short lived and the Aussie Dollar would reverse soon.

The larger degree potential wave counts are as follows (not seen on the chart displayed here). The AUDUSD had dropped towards 0.5505 levels in March 2020. Since then, it has carved a series of higher highs and higher lows until recent swing highs at 0.7965.

The entire rally could be seen as the first larger degree impulse wave. Ideally, an impulse wave should be followed by a corrective wave (3 waves) towards the opposite direction. AUDUSD might be just underway to produce a corrective drop.

The recent potential wave counts are as follows: The drop since 0.7065 seems to have sub-divided into 5 waves, labelled as Wave 1 or A. The subsequent rally seems to be corrective a-b-c, and managed to reach the fibonacci 0.88 retracement of Wave 1, around 0.7040 yesterday.

The termination could be marked as Wave 2 or B. If the above structure remains intact, AUDUSD should reverse lower from here, towards 0.6530 levels going forward. Traders might have initiated fresh short positions around 0.7000 levels with stops above 0.7065 respectively.

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