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Bears Might Want to Take Over on AUD/USD from 0.6800

June 15, 2020 at 7:57 by Dorin Rosu

The Australian dollar versus the US dollar currency pair corrected heavily from the 0.7000 mark. Is it only a bearish correction, or a sign of bearish strength?

Long-term perspective

That rally that commenced from the 0.5516 level extended all the way to the 0.7064 high. Considering the retracements printed along this path, the current one seems to be the most pronounced.

Besides this, the fact that the price retraced from an important level, the psychological 0.7000 (note the 0.7019 high), and that the period during which the market oscillated above the level was so short that the high stamped at 0.7064 may be considered a false piercing, can make the participants think twice about the bullish potential.

However, the market still sits above the ascending trendline, which aids in a bullish movement. One scenario that derives from such a context is the one in which the price validates the trendline as support and get above the intermediary level of 0.6873. From here, a new march towards the 0.7000 key level (0.7010 on the chart) can thus take place. And, if 0.7010 becomes support, then the bulls can extend until the next major level, 0.7191.

Another scenario that also gives credit to the bulls is the one in which the price falsely pierces the trendline only to stop in the 0.6722 level, from where a new appreciation may start, targeting the same 0.7191 level.

Only if 0.6722 gives way, then the bears could send the price towards 0.6386, 0.6623 and 0.6553 being intermediary profit booking areas.

Short-term perspective

The price is in a descending trend, the resistance line of which starts from the 0.7038 high and continues via the 0.6909 peak.

After the confirmation as resistance of the intermediary level of 0.6889, the price defined a new impulsive wave that took out the previous one at 0.6799 and also pierced the 0.6818 level, also an intermediary one.

If the market participants confirm the area noted by the descending trendline and the 0.6818 level as resistance, then their next stop may very well be the solid 0.6746 level which, if it becomes resistance, opens the door to 0.6660.

On the other hand, if the aforementioned defined area becomes support, then the bulls may have another run for 0.6889 and, maybe, even for 0.6949.

Levels to keep an eye on:

D1: 0.6873 0.7010 0.7191 0.6722 0.6623 0.6553 0.6386
H4: 0.6818 0.6746 0.6660 0.6889 0.6949

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