AUDUSD is being capped at a very strong resistance level where there is a confluence of moving averages and Fibonacci levels.
This resistance level lies at 0.7140. It is the 23.6% Fibonacci retracement level of the downleg from 0.8162 to 0.6826. (May 2015 to January 2016 decline). Also this is where the 100 and 50 day moving averages converge. Therefore the rally that started from the January low of 0.6826 stopped at 0.7140 on Friday. There is now a reversal of prices from this resistance level with scope to drop to the 0.7000 psychological mark.
If the pair drops below 0.7000, then the 0.6826 low will provide immediate support before it could re-test the 0.6800 area. Alternatively, if AUDUSD breaks resistance at 0.7140 it would rise to test the next resistance level at 0.7337, which is the 38.2% Fibonacci level.
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