AUDUSD May Get Huge Support At 0.7000

The Australian Dollar (AUD) extended downside movement against the US Dollar (US Dollar) on Monday, dragging the price of AUDUSD to less than even 0.7135 following the release of some key economic releases from Australia. The technical bias remains bearish due to a Lower Low and Lower High in the recent wave.

Technical Analysis

As of this writing, the pair is being traded around0.7137. A support may be noted around0.7039, the swing low of the recent downside move ahead of 0.7000, a major psychological number as demonstrated in the following daily chart. A break and daily closing below the 0.7000 support area could incite renewed selling pressure, validating a dip towards the 0.6600 support area in the long run.

On the upside, the pair is expected to face a hurdle near 0.7230, the 23.6% fib level ahead of 0.7348, the 38.2% fib level and then 0.7443, the 50% fib level. The technical bias will remain bearish as long as the 0.7143 resistance area is intact.

New Home Sales Report

According to the HIA’s new home sales report, the number of new homes sales declined modestly in July, dropping 0.4 per cent over the month. Over the three months to July this year detached house sales fell by 2.8 per cent to be 3.4 per cent lower when compared to the corresponding period in 2014. Meanwhile, apartment sales fell 4.2 per cent in July following a 2.9 per cent dip in June. Generally speaking, higher home sales reading is considered positive for the economy and vice versa.

Trade Idea

Considering the overall technical and fundamental outlook, buying the pair around current levels appears to be a good strategy in short to medium term if we get a valid bullish pin bar, hammer or bullish engulfing candle around the current levels.'
Usman Ahmed

Usman Ahmed is an individual forex trader and market analyst. He holds a Masters of Business Administration (MBA) degree. His work includes fundamental and technical reports on various currency pairs, commodity futures and stock markets. His technical analysis features price action strategies.

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