AUDUSD falls to 10-month low, sees potential for further weakness

AUDUSD fell to the lowest in ten months on Thursday, remaining under increased pressure from strengthening US dollar, driven by hotter than expected US inflation in October and more hawkish tones from Fed policymakers.

The pair remains in steep downtrend from 0.7067 (Oct 29 lower top), interrupted by brief corrections that lasted one day each, suggesting that bears firmly hold grip.

Recent break of the neckline of Head and Shoulders pattern on weekly chart, generated fresh bearish signal, adding to bearish picture on daily chart (negative momentum continues to strengthen / MAs in full bearish configuration).

Break of former lows / range floor at 0.6855/33 contributed to negative signals, with weekly close below these levels needed to confirm bearish continuation signal.

Bears eye initial target at 0.6758 (Fibo 38.2% of 0.5914/0.7277) violation of which to unmask ascending 100DMA (0.6700) and sideways-moving 200DMA (0.6659).

Consolidation / limited correction may precede further dips as daily stochastic is deeply oversold and falling RSI is approaching the boundary of oversold zone.

Upticks should be ideally capped at 0.6920 zone (broken neckline / falling 10DMA).

Res: 0.6859; 0.6885; 0.6920; 0.6955
Sup: 0.6756; 0.6700; 0.6659; 0.6595