February is coming to an end, a month that turned out to be extremely unfortunate for the Australian dollar and the AUD/USD pair, which lost all the gains of the previous two months and continues to decline towards the December low of 0.6688.
With last week's breakdown of the key support level 0.6855 (200 EMA on the daily chart), the pair returned to a steady and long-term bear market.
Technical indicators OsMA and Stochastic on daily and weekly charts are also on the sellers' side.
The nearest targets in case of a further decline are the local support levels 0.6665, 0.6635, and the distant targets are near the 0.6200, 0.6170 (lows from April 2020). A breakdown of today's low at 0.6698 may be a signal to increase short positions.
However, as always, the alternative scenario is not excluded. According to this scenario the pair will resume growth towards the above-mentioned key level of 0.6855. The breakdown of the resistance level 0.6875 (50 EMA on the weekly chart), and then breakdown of the local resistance level 0.6920 may create the preconditions for the further growth, returning AUD/USD to the medium-term bull market zone, which is clearly expressed in the daily chart as the upward channel. Its upper boundary at the moment is near the level of 0.7300.
It is too early to speak about its achievement. But the Australian dollar, and hence the pair AUD/USD, has the potential to grow further, based on the tough stance of the RBA leadership on the prospects for monetary policy of the Australian Central Bank. The earliest signal for the beginning of this scenario could be a breakdown of today's highs and the level of 0.6741.
And tomorrow and Wednesday morning, we should expect a significant increase in volatility in the AUD quotes and the AUD/USD pair, respectively.
Support levels: 0.6700, 0.6665, 0.6635
Resistance levels: 0.6741, 0.6800, 0.6825, 0.6836, 0.6855, 0.6875, 0.6896, 0.6900, 0.6920
Trading scenarios
Sell Stop 0.6680. Stop-Loss 0.6750. Take-Profit 0.6665, 0.6635, 0.6600, 0.6500, 0.6455, 0.6390
Buy Stop 0.6750. Stop-Loss 0.6680. Take-Profit 0.6800, 0.6825, 0.6836, 0.6855, 0.6875, 0.6896, 0.6900, 0.6920, 0.7000, 0.7040, 0.7075, 0.7100, 0.7140
