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AUD/USD Continues to Build a Price Bottom

AUD/USD has been trying to build a price bottom since February. We can see in the 4H chart that price broke above a consolidation range resistance of 0.7850 last week. This essentially put in a price bottom, but AUD/USD failed to extend beyond 0.79. It retreated and continued to fall this week until the 0.7740-0.7750 support. 

AUD/USD 4H Chart 3/4
(click to enlarge)

At the 0.7750 support area, AUD/USD rebounded as the RBA held the official cash rate at 2.25% instead of cutting it further to 2.00% as many expected. It came up and stalled at 0.7850. Then, after the AUS GDP data, it was able to hold above 0.78 and continued to edge higher as we got into the 3/4 US session.

AUS GDP q/q (Q4): 0.5%, Forecast: 0.7%, Previous: 0.3%


(click to enlarge; source: forexfactory.com)

The GDP data was subdued, but not terrible. It might not be bad enough to cause the RBA to cut rates further, but it will prevent the central bank from turning hawkish any time soon. As we can see in the 4H chart, the reaction to this week's event risks have kept the price bottom scenario in play. A break above 0.7850 could signal further bullish correction.

The daily chart shows that AUD/USD might have to break above 0.79 in order to convince traders that it has bottomed. That would at least open up the 0.8030 support/resistance pivot area. Above that, there is the 0.8250-0.83 highs on the year. After a break above 0.79, a hold above 0.7850 would strengthen the outlook towards 0.8030 and 0.8250-0.83. 

AUD/USD Daily Chart 3/4
(click to enlarge)

Failure to break above 0.79 followed by a break below 0.7850 would be a signal for bearish continuation, which would put the 0.7626-0.7650 lows in sight with strong risk of falling lower.