AUD/USD analysis: strong bounce from yearly low favors another leg higher

Valeria Bednarik FXStreet

AUD/USD Current price: 0.7116

Double bottom underway, neckline of the figure at 0.7130.
Australian Financial Stability Review and home data to be out this Friday.

The AUD/USD pair tested its yearly low before changing course, closing the day with solid gains above the 0.7100 level on the back of dollar's broad weakness. The Australian Melbourne Institute consumer inflation expectations' gauge remained at 4.0% in October, according to the official release, adding to Aussie's recovery, alongside base metals' prices with gold soaring above $1,225.00 a troy ounce. Australian will release the Financial Stability Review and home loans data early Friday.

Dollar's weakness is set to persist, favoring another leg higher for the AUD/USD pair, which now trades around the 38.2% retracement of its latest daily slide. In the 4 hours chart, the 20 SMA has extended its advance below the current level, now converging with the 23.6% retracement of the mentioned slide, while technical indicators maintain their strong upward slopes, nearing weekly highs. Furthermore, the pair seems to be developing a double bottom at 0.7040 with the neckline of the figure being this week high of 0.7130. Nevertheless, a firmer recovery would be likely on a break above 0.7140, the 50% retracement of the same decline.

Support levels: 0.7085 0.7040 0.7010

Resistance levels: 0.7140 0.7175 0.7200

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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