The Australian dollar has to remain uncertain against the US dollar currency as the move lower in the pair starts to dramatically accelerate to the downside after the price broke 0.7000.
Risk-on asset classes have been getting slammed since the US monthly jobs report was released, with the US dollar gaining significant upside traction against commodity related currencies.
Even the RBA rate hike today failed to lift the AUDUSD pair back above the 0.7000 level. However, a minor rally has occurred, which is not really surprising given the scale of the fallout from 0.7150 to 0.6800.
A key speech from Jerome Powell is likely to be the next big market mover for the AUDUSD pair. If Chair Powell hints at a backtracking on his dovish rate tone then further losses are likely.
It is noteworthy that the price charts are hinting more severe losses of the 0.6800 level cracks based upon the size of a large wedge pattern, which point towards a further 300 point decline.
According to the ActivTrader market sentiment tool some 86 percent of traders are bullish towards the AUDUSD pair. As we typically look to fade sentiment biases, this could mean the AUDUSD pair could continue to move lower.
It is worth mentioning that high levels of bullish sentiment suggest a classic contrarian sentiment trade is still in the making, so do be careful buying this pair at current level, especially as we trade around current levels.
AUDUSD Short-Term Technical Analysis
The four-hour time frame shows that a large ascending broadening expanding wedge type pattern has formed. We may see the AUDUSD pair forming a much larger reversal pattern if a drop towards the 0.6500 area.
Based upon its overall size, and of the pattern is correct then a move back to the 0.6500 region seems plausible. If a strong breakout takes hold expect further heavy downside in the days to come.
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AUDUSD Medium-Term Technical Analysis
The daily time frame shows that a large, inverted head and shoulders. These types of patterns are typically considered to be one of the most reliable bullish reversal patterns.
According to technical analysis we could see a much more steeper price drop if this is a complex inverted head and shoulders. A potential buying opportunity could be coming if the pattern is correct.
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