AUDUSD testing major resistance level, the strong challenge for the bulls

The AUDUSD pair tumbled hard after breaking the long-term trend line support level at 0.76306. From that level, the pair slowly headed towards the major support level at 0.74537. Though we had an initial breach of that support level the bulls finally managed to take control of the market. From that level, the pair rallied towards the broken trend line support level at 0.76306 and faced an extreme level of bearish threat. Just above this level, we have 38.2% bearish Fibonacci retracement level. Most of the short-term traders are waiting in the sideline and any bearish price action confirmation signal near the 38.2% Fibonacci retracement level will be an excellent opportunity to execute short orders.

AUDUSD daily chart analysis

Figure: Aussie bulls losing momentum near 38.2% bearish retracement level

From the above figure, you can clearly see the sellers are slowing coming back into action to drive the price down. If the bulls fail to clear the critical resistance level at 0.76899 we will see a strong downfall in this pair. The bulls will have a tough time in clearing out the current resistance level since we have 100 and 200 days SMA.A daily closing of the price above the 200 days SMA will turn the overall bias of this pair strongly bullish. This will eventually lead this pair towards the 61.8% bearish retracement level. On the downside we need to break below the low of 7th may establish strong bearish momentum.

AUDUSD weekly chart analysis

Figure: AUDUSD testing broken trendline support

In the weekly chart, we have a complex situation. You can clearly see the price has broken the trend line support level at 0.76238. Prior to the closing of the last trading week, the pair tested the broken trend line resistance and formed a nice bearish pin bar. This strongly suggests the bears are trying to gain control over this market. The first initial bearish target for this pair lies at the 50% bullish retracement level drawn from the low of 10th January 2016 to the high of  21st January 2018. We might see some strong bullish bounce at the 50% bullish retracement level but a clear break of that level will eventually lead this pair towards this 61.8% retracement level. The critical support level at 0.73109 is going to provide an extreme level of bullish thrust to the AUDUSD pair. However, a clear break of that level will turn the overall bias of this pair strongly bearish.

Fundamentally the U.S dollar has regained its strength in the last trading week after strong NFP data release. Moreover, a rate hike in the month of June is almost a done deal. An imminent rate hike with a hawkish statement from the FED officials will definitely push the AUDUSD pair significantly lower. Considering the technical and fundamental parameters, the pair is most likely to go down. However, any dovish statement from the FED officials will fuel the Aussie bulls in the global market. So it’s better to wait in the sideline until we get a clear signal to trade the market.