AUD/USD has broken below the floor of a short-term range before pulling up. It looks poised to extend its fall, declining to substantial targets below. 

That said, the pair is probably in a sideways trend which given “the trend is your friend” could extend. This suggests there is a risk of a recovery back inside the range and the unfolding of an up leg towards the range ceiling in the 0.6680s. 

AUD/USD 4-hour Chart

(Click on image to enlarge)

AUD/USD is at a critical turning point. It has pierced the bottom of a range after a steep decline and is vulnerable to further weakness. A break below the 0.6579 low of June 7 would confirm the bearish hypothesis and indicate a likely decline to an initial target at 0.6534. The target is generated using the technical analysis method of using the height of the range and extrapolating it by a Fibonacci 0.618 ratio lower. 

At the same time there is still a possibility the pair could recover and unfold a new up leg back up to the range highs. There are no signs from price action, however, that this is happening yet. A break above the 200 Simple Moving Average (SMA) at 0.6612 would provide added confirmation such a move was unfolding. 

It would add confirmatory evidence to the bullish hypothesis if a new up leg was accompanied by the Moving Average Convergence Divergence (MACD) indicator crossing back above the red signal line. 

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