AUD/USD has broken below the floor of a short-term range before pulling up.
AUD/USD looks vulnerable to breaking out of the bottom of a range and declining substantially lower. The steepness of the sell-off on Friday is a further bearish sign. It is in a sideways trend, however, so there is also a possibility of a recovery within the range. It looks poised to extend its fall, declining to substantial targets below. That said, the pair is probably in a sideways trend which given “the trend is your friend” could extend.
A break below the 0.6579 low of June 7 would confirm the bearish hypothesis and indicate a likely decline to an initial target at 0.6534. The target is generated using the technical analysis method of using the height of the range and extrapolating it by a Fibonacci 0.618 ratio lower. At the same time there is still a possibility the pair could recover and unfold a new up leg back up to the range highs. There are no signs from price action, however, that this is happening yet.
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