AUDUSD: Confused Aussie, Looks for Direction

The Australian Dollar has been fluctuating over recent weeks, with the pair still stuck in a 100 pips range between 0.7150 and 0.7050. It was flattish on Thursday and the AUDUSD pair traded near 0.7060 during the London session.

On the downside, two supports are near each other, with the first bids probably located at this week's lows near 0.7055 and then cycle lows could be located at 0.7045. If this level is taken out, the Aussie could deteriorate toward the psychological level of 0.70 and more importantly, the long-term bearish trend would be confirmed.

On the upside, the first stronger resistance might be at 0.7090 and if broken, further rise toward 0.71050 might occur. On the two-hour chart, this resembles a double bottom pattern and it reflects the potential that this formation could be around 55 pips. Therefore, if bulls push the pair above 0.71050, we could see another leg higher targeting the key selling area near 0.7150.

Sentiment appears negative for commodity currencies and thus the opportunity may arise, with the AUDUSD pair remaining in a long-term bearish trend.

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