FxWirePro: AUD/USD bounces off daily cloud with 'Morning Star' formation, further downside only on break below 0.78

• AUD/USD halted downside at 0.78 handle, has bounced off strong cloud base support.
   
• The pair edged higher from 10-week lows at 0.7799 to close at 0.7852 levels in Thursday's trade.
   
• We see a 'Morning Star' formation at lows which raises scope for recovery in the pair.
   
• However, technical studies are heavily bearish. Indicators on weekly charts support weakness.
   
• Weekly RSI and Stochs have rolled over from overbought. MACD is on verge of bearish crossover on signal line.
   
• Break below 0.78 support to see test of 0.7778 (weekly 20-SMA) ahead of 100-DMA at 0.7763.
   
• On the flipside, 5-DMA at 0.7872 is immediate resistance, break above will see test of 50-DMA at 0.7942.

Support levels - 0.7799 (cloud base), 0.7778 (weekly 20-SMA), 0.7756 (38.2% Fib retrace of 0.71599 to 0.81250 rally)

Resistance levels - 0.7871 (5-DMA), 0.7897 (23.6% Fib), 0.7942 (50-DMA)

Recommendation: Watch out for break below daily cloud for further weakness. Target 0.7763/ 0.7715.

FxWirePro Currency Strength Index: FxWirePro's Hourly AUD Spot Index was at -168.953 (Bearish), while Hourly USD Spot Index was at 132.796 (Bullish) at 0520 GMT. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex.

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