Aussie dollar heading towards 61.8% retracement level, strong challenge for the bulls

The AUDUSD pair found some strong buying pressure after it hit the long-term trend line support level at 0.75005.From that level, the pair has rallied significantly higher and currently headings towards the 61.8% bearish retracement level from the high of 8th September 2017 to the low of 11th December 2017.Most of the professional long-term traders will be looking for bearish price action confirmation signal near the 61.8% retracement level to execute their short orders. If the bears manage to limit the recent bullish move of the Aussie dollar, the first bearish target for this pair would be the critical resistance level at 0.77760.This level is going to provide significant buying pressure to the AUDUSD pair since it has been backed by the 100 days SMA. However, a daily closing the price below the dynamic support level at 0.77760 will ultimately lead this pair towards the major support level at 0.76950.

AUDUSD daily chart analysis

Figure: AUDUSD slowly heading towards the 61.8% retracement level

From the above figure, you can clearly see that AUDUSD pair is slowly heading towards the 61.8% retracement level from where we might see some bearish movement of this market. However, a daily closing of the price above the 61.8% retracement level will turn the overall bias of this pair into bullish mode. On the contrary, a long dive below the 100 SMA will confirm the resumption of medium-term bearish trend.

AUDUSD weekly chart analysis

Figure: AUDUSD testing 200 day weekly SMA

In the weekly chart, the AUDUSD pair has been testing the 200 weekly SMA and most importantly the buyers failed to break the dynamic resistance level at 0.78700 prior to the closing of the last trading week. If the price manages to break above the 200 weekly SMA, we will see a strong bullish surge. This will ultimately target the high3rd September 2017.This level is going to play a major role since a clear break of this level will confirm the end of the long-term bearish trend in the AUDUSD pair. On the contrary, if the price drops below the critical support level at 0.76850, we will see a strong bearish move in the pair towards the next critical support level at 0.75011.From that level, we might see some decent bounce. This level is strongly supported by the long-term bullish trend support drawn on the weekly chart and daily closing the price below the 0.75011 mark will bring fresh selling pressure to this pair.

Currently, the Aussie dollar is trading near a very critical zone and selling this pair without any price action confirmation signal will be an immature act. On the contrary in the absence of definite bullish breakout signal, buying this pair at such a high price is not worth taking the risk. So it’s better to stay on the sideline and see whether the sellers manage to cap the recent bullish movement near the 61.8% retracement level.