The AUDUSD is breaking to the downside after sellers regained control in today’s trading. Recall that yesterday the pair found support against the 100-hour moving average during the early North American session and pushed higher. That rally extended above Monday’s high at 0.72587 and last Thursday’s high at 0.72635. However, buyers could not generate enough momentum to break above last Wednesday’s high at 0.7277, and the failure near that key ceiling opened the door for a reversal lower.
In trading today, the pair initially moved lower before rebounding during the late Asia-Pacific session. That bounce, however, stalled near the May 7 high, and sellers stepped back in aggressively. The subsequent decline first tested the 100-hour moving average, where buyers attempted to stabilize the pair. That support has now given way.
Over the last two hours, the AUDUSD has broken below both the 100-hour and 200-hour moving averages, with the 200-hour MA currently near 0.7225. The move has also pushed below an important swing area between 0.7221 and 0.7227. That zone now becomes close risk resistance for sellers. As long as the price stays below it, the bearish bias remains in control.
On the downside, the next key target comes at the 38.2% retracement of the rally from the April 17 swing low at 0.7209. A move below that level would increase the bearish momentum and open the door toward the next swing area between 0.7193 and 0.7200. The 50% retracement level comes in at 0.7189.
The sellers are making their play after forcing the break below the 200-hour moving average. The key question now is whether they can maintain the downside momentum and build on the technical breakdown.
This article was written by Greg Michalowski at investinglive.com.
