AUD/USD Looks To Test Support At 0.74 Again

 | Jul 14, 2015 14:54

AUD/USD – Tuesday, July 14th, 2015

The Australian dollar has fallen sharply over the last few weeks, which has culminated in a new six year low below 0.74 early last week. Since that time, the AUD/USD has traded in a narrow range between 0.74 and 0.75, with the former providing reasonable support and the latter providing stiff resistance during this time. It is presently relying upon support at 0.74 and testing this level. It has also been able to consolidate a little and catch its breath after the recent strong falls. A couple of weeks ago, the Australia dollar was starting to feel some selling pressure from the 0.77 level, and it had its eyes firmly focused on the long term support level at 0.76. A few weeks ago, the AUD/USD fell sharply lower below 0.77; however, it found solid support from the long term support level at 0.76. This level has provided solid support throughout most of this year, so it is quite significant that it has now been strongly broken.

In the first half of June, the Australian dollar surged higher from below 0.77 up to a three week high; however, it ran straight into resistance at the key 0.7850 level, which has performed this role several times this year. Throughout this time, it also spent most of its time trading quite steady around the 0.7750 level, whilst receiving solid support from 0.77. Over the last couple of months, the resistance level at 0.7850 has played a major role and continues to place selling pressure down on the AUD/USD. Throughout this same period, it has been enjoying rock solid support from the long term support level at 0.76, which has allowed it to rebound strongly back up to above 0.78 on more than one occasion.

Throughout the second half of May, the Australian dollar fell sharply from a four month high above 0.8150 down to the key support level at 0.76. This level has been a significant level for a couple of months, and has propped the Australian dollar up on multiple occasions. This recent price action has been a significant reversal, as it wasn’t so long ago that the AUD/USD was in a solid medium term up trend, having broken through the key 0.7850 level and achieved the four month high above 0.8150. For most of this year, the Australian dollar has traded within a wide trading range between the support at 0.76 and resistance around 0.7850. Earlier this year, in February, that range was tighter, with the support level higher at 0.77. Throughout this period, it experienced reasonable swings back and forth between the two key levels, with very few excursions beyond the levels.

(Daily chart / 4 hourly chart below)

AUD/USD July 14 at 01:40 GMT 0.7393 H: 0.7411 L: 0.7388

AUD/USD Technical

S3 S2 S1 R1 R2 R3
0.7400 — — 0.7500 0.7850 0.8150
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During the early hours of the Asian trading session on Tuesday, the Australian dollar is drifting lower below 0.74, as it threatens to maintain the break below this level. Current range: trading right below 0.7400.

Further levels in both directions:

• Below: 0.7400.

• Above: 0.7500, 0.7850 and 0.8150.

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