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AUD/USD dips below 0.8650! What is next?

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The Australian dollar is continuing to look bearish against the dollar for another week, following the break below, both the 0.9200 level and the 50-period SMA on the weekly chart. Currently the rate is moving slightly below the previous low and a key support level at 0.8650. That said, we may see a little more caution among traders as the downside rally continues, after last week’s aggressive move below the aforementioned level.

With the above in mind, if the selling pressure continues to drive the price lower, I would expect the bears to challenge the next support level at 0.8300. A decisive dip below that level then we could see further pressure on the key support level at 0.8050. The AUDUSD pair remains in a downward sloping channel and alongside with the bearish cross of the simple moving averages, they shift the odds for further downward movement. Furthermore, the MACD is moving in a bearish territory and the Relative Strength Index is moving below 50, adding to the bearish picture of the pair.

Alternatively, if the pair bounces back up, which I do not foresee at the moment, it could retest the strong resistance level at 0.9200 and further to 0.9500.

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