AUDUSD: Aussie Tests First Major Resistance

The Australian Dollar was trading flattish during the London session on Tuesday and, the AUDUSD pair was hovering at around 0.7075 as volatility has been minimal so far during the day.

The pair still seems to remain in a long-term bearish trend and is posting lower highs and lower lows, therefore confirming the downward momentum. Bears seemed to close some of their short positions and the AUDUSD pair has ticked higher recently, but it stopped at the first major resistance of previous lows, which stands at around 0.7090.

If this resistance is breached, we could see the continuation of short-covering and the relief-rally might push the Aussie to another strong selling zone at around 0.7150. However, as long as the pair remains below the critical bearish trend line (currently at 0.72) the outlook seems bearish and rallies could be sold.

On the downside, bids might be located at the current swing lows near 0.7050 and if this level falls, the Aussie might deteriorate toward the psychological level of 0.70, which would also represent new two and a half year lows for the AUDUSD pair.

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