Originally published by AxiTrader
The Australian dollar came under heavy pressure again yesterday after more concerns were raised that Q1 GDP could print negative and after the release of the Caixin Chinese manufacturing PMI data which unexpectedly dipped into contraction territory.
That saw it fall around 50 points - half a cent - over the past 24 hours.
Rather than tell the story of why the Aussie dollar is falling in a fundamental sense this morning I just want to focus on the monthly chart of the Australian Dollar (USD). For those who are interested in the fundamental backdrop I made the case for the Aussie dollar's deficiencies yesterday, on Wednesday and last week with the outlook which suggests it will fall back below 70 cents.
Before I get to the longer term outlook it is worth noting the Aussie dollar made a recent low at 0.7330 and that is where prices appear to be biased in the short term. It was solid support a couple of week's back with traders clearly respecting this level which is the 50% retracement of the 2015/2016 rally.
So it should find the buyers again.
Longer term though - very long term - the month charts suggest a currency stuck in a broad range but with a bias back down toward the bottom of that range.
As the monthly chart above highlights, the AUD/USD has been in a broad 0.7150/0.7750 range since May 2016. If you broaden it to 0.7100/0.7850 we can say that's the range since March 2016 - 15 months.
Either way though in the grand scheme of things, and on this very long time frame over more than 20 years the Aussie is trading narrowly and sideways.
So having spent a protracted period of time testing the top of the range, and having found solid resistance at these range tops the Aussie has drifted lower for the past 4 months (including June).
With my 13 month ema pointing lower, and with the range highs reconfirmed the bias is toward the range base.
Key is 0.7330. If the May low breaks then a run under 72 cents to the 2017 low at 0.7150i/60 is in the offing.
Have a great day's trading.