The Australian dollar lost its high range in late October and seems to have stabilized at a new range. Support is found at 0.7625 and resistance is at 0.7730. Any drop to the downside was followed by a rise to the upside in recent days.
This is the case today as well. After falling to the support line, the pair is now trading some 50 pips higher, around 0.7675, more or less in the middle of the range. Yet a closer look at the hourly chart shows a tendency to the downside.
While this isn’t manifested in a deeper dive, the highs are lower. 0.7678 is the high for today, lower than 0.77 beforehand and 0.7730 before that. The black line on the chart demonstrates the move.
Lower highs – a bearish sign.
There hasn’t been any fresh data out of Australia and the RBA decision did not provide any earth-shattering news. In China, the trade balance surplus came out slightly lower than expected at 38.2 billion, yet again, nothing huge.
The recent rise of the pair from the lows can be attributed to the slide of the greenback. News coming out of Washington suggests disagreements among Republicans regarding the tax plan.
Yet the news that is supposed to lift to the Aussie is only good enough for a lower high. When the tax-related move fades away, will AUD/USD fall towards 0.76 and beyond? This is an open question.
More: Elliott Wave Analysis: AUDUSD and NZDUSD
Here is the chart:
