AUD/USD: Need for further period of consolidation/correction - NAB

FXStreet (Delhi) – Research Team at NAB, suggests that the recent bounce in AUD/USD completed a bullish weekly reversal pattern last week that implies exhaustion in the downtrend and the need for a further period of consolidation/correction.

Key Quotes

“Tuesday’s dip held above ST 61.8% retracement support at 0.6911 (low 0.6919) and the strong close completed a ST continuation pattern, confirming an uptrend bias in the ST. While the likelihood of further ST gains is high, only a weekly close above the broken triangle base at 0.7150/70 would negate the MT downtrend. A January month end close below 0.7000/20 would complete a further LT bearish continuation pattern and trigger a more bearish multi-month outlook.

Momentum

ST Momentum has shifted to a positive bias implying further consolidation/correction in the near term. MT momentum remains negatively biased, highlighting the MT downtrend.

Outlook

Directional bias is now highly conflicted across time frames. As such, price has entered a consolidation/correction phase. 0.6900/30 support should be a firm base in the coming days ahead of further correction towards 0.7100/50. A resumption of the downtrend will depend upon the price response to these upper levels and a return to a negative ST momentum bias.”