How Far Will The Australian Dollar Fall?
June 6, 2013 7:42 am GMT+0 in Chart Alert
On May 7th the interest rate was cut by the RBA from 3.0% to 2.75% and that immediately brought a steep fall for the Australian Dollar. The following daily chart of AUD/USD shows the price action and fall since that day.
AUD/USD’s fall since interest rate cut
The bearish sentiments became stronger first when the currency pair broke below 0.9582 which was the low one year back and then with the break below the psychological level of 0.9500. As of now the pair has touched a low of 0.9434 which is a level which was never tested since the second week of October 2011.
In the beginning of October 2011 AUD/USD had witnessed a low of 0.9387. Interestingly that low and possible support is very close to a possible trend line support.
AUD/USD coinciding support levels – Weekly chart
Why 0.9582 support was even more important?
0.9582 was not only a very strong support level during the previous great fall but it had the combined strength of another support. The 50% retracement of the upward move from 0.8082 to 1.0180 was 0.9581, just 1 pip below 0.9582. This had made a support at that level even more important. A breach of that support clearly indicated that we may see some new lows. And as mentioned a break of 0.9500 added fuel to those bearish mood.
In case the above mentioned support zone of the trend line and the low of 0.9387 also fails then the pair would be expected to test the 61.8% retracement level of the upward move from 0.8082 to 1.0180 i.e. 0.9227.
Both the above points are indicated in the following weekly chart of AUD/USD.
AUD/USD failed the power of 0.9582 and may test 61.8% retracement
You may please also check the outlook and forecast of AUD/USD which is updated weekly.