AUD/USD analysis: failure at 0.7100 opens doors for fresh yearly lows

Valeria Bednarik FXStreet

AUD/USD Current price: 0.7067

The Australian macroeconomic calendar has nothing to offer this week, Aussie vulnerable to sentiment.
AUD/USD nearing 0.7040, yearly low and bearish breakout point.

The Australian dollar advanced against its American rival up to 0.7105 at the beginning of the day, but it was all the way down since there through the European and American sessions. The positive tone of the pair was unable to overshadow another day of poor equities' performance, hurt by continued political jitters in the EU and prospects of slowing worldwide economic growth. US indexes are once again down, despite overall encouraging earnings reports. Meanwhile, the Australian macroeconomic calendar remains empty, with nothing out this Wednesday and nothing scheduled for Thursday.

The 4 hours chart for the AUD/USD pair shows that the early advance was contained by a bearish 100 SMA, with the pair now trading also below a bearish 20 SMA, which slowly accelerates below the larger one. This last is now converging with the 23.6% retracement of the October slide, reinforcing the static resistance level at around 0.7090. In the same chart, the Momentum indicator remains directionless below its mid-line but within familiar levels, but the RSI heads sharply lower near oversold readings, keeping the risk skewed to the downside. 0.7040, the yearly low, is a key support, with a break below it probably resulting in a steeper sell-off, particularly if the negative mood among equities' traders persists.

Support levels: 0.7040 0.7000 0.6960

Resistance levels: 0.7090 0.7120 0.7155

View Live Chart for the AUD/USD

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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