AUD/USD tried to move up but failed at 0.9080 which was 5 pips below the previous strong resistance. The pair engaged in a sideways pattern over the last week before closing for the week at 0.8976.
On one hand the failure to retest 0.9085 indicates the fear for the upside but on the other hand every drop has been finding support near or at 55-day day EMA. Also the daily lows have been getting slightly higher. The combination of these facts is keeping the immediate outlook neutral for AUD/JPY.
On the downside the first support is expected at 0.8937. Even if that fails another support should come at 0.8906 of February 10, 2014. If these supports hold then some further upward consolidation is not ruled out. The critical resistance on the upside is 0.9085 and a break of that should make AUD/USD target the next resistance zone of 0.9134 to 0.9168 and then possibly 0.9200 to 0.9209 resistance zone.
However the recent resistances are indicating a resistance of the 38.2% retracement level of the fall from 0.9758 to 0.8660. Not only this but there are combinations of resistances up ahead as mentioned in a post titled "Revisiting The Combination Of Resistances For AUD/USD
". Considering this we stay cautious for the gains.
On the downside, any break below 0.8906 will start making the outlook again bearish but a better indication will come by any decisive break below 0.8860. Such a move should find some strong support at 0.8800, however a failure of that will turn the focus towards a retest of 0.8660 first and then 0.8633
From the longer-term perspective, the real signs for a longer-term reversal will only come with any break over 0.9758 but the initial signs are already there with the strong support at 0.8660. The strong recovery came well ahead of retesting 0.8633 of July 2010. Please check the post titled "Australian Dollar’s Fall – Was It Just The Employment Numbers?
", for the same. However, if AUD/USD manages a decisive break below 0.8633/0.8620 support zone then the fall should extend towards 0.8510/0.8520 support zone. Please note that even if such a move takes place, the psychological support of 0.8500 may result in some volatile and sideways moves with some frequent supports. 0.8500 may also prove critical because of the long-term trend line support, as indicated in the above mentioned post, should come into the picture there. However, if the pair manages any decisive break below 0.8500 then further decline towards 0.8316/0.8320 cannot be ruled out.