Taking a step back and looking at the bigger picture, it looks like the AUDUSD is now trading near a key support area at 0.8570. The only question is, will it hold on like bad romance or is a breakdown in the cards? If we see the pair close above the key support level with a long wick, it could signal that we may see a reversal, especially since stochastics are now in oversold territory. On the other hand, if a daily candle closes significantly lower, we could see the pair continue to drop before finding support around 0.8475.
Remember that channel on the NZDUSD awhile back? Well, it looks likes its broken now, as the pair has dropped the past couple of days and is now sitting above support at 0.6850. With stochastics indicating oversold conditions, we could see buyers jump back in soon. Then again, if we see a candle close below the recent lows, the pair may just drop to as low as the 0.6700 handle!
After its sharp decline from last week, the guppy pulled up and found resistance at the 38.2% Fibonacci retracement level. The pair is now treading close to the support at the psychological 131.00 handle, which is closely in line with this week’s low. Would it make a break or a bounce? If the support holds, the pair could climb to test the falling trend line connecting the highs of the price. But if it breaches support, it could fall until this month’s low of 130.02 or even lower!