AUD/USD: Buy on dips favored after double bottom confirmation

Cycles & Levels: The weekly shows a market in a clear down-cycle but as one takes a closer look, the latest bullish candle suggests more upside might be likely after multiple failures to take out 0.70. On the daily, a descending trendline caps the upside of a developing up-cycle. If buyers can re-group by pushing higher in coming days/weeks, 0.73 is the next 100% fib proj target. On the hourly, the over extension of the price and the latest counter-cyclical order flow warrants caution for a potential retest of the circled support areas between 0.7150 down to 0.71, where value to be a buyer and hence an area set to exhibit demand imbalances may be found.

Correlations & Volumes: Correlated assets argue for an overall bullish momentum in the Aussie. Judging by where most of the volume was exchanged last Friday (~0.72), sellers should now avoid the pair building higher value above the mentioned round number or else the risk of seeing bullish follow-through continuation rises. If we are to be guided by Friday’s price action alone, it’s undeniable that the candle clearly communicates the risk of at least 0.7150 being re-tested but with the EM FX index breaking higher and the market on structurally ‘risk on’ dynamics, it’s hard not to see any setback as an opportunity to be a short-term buyer.