Is AUD/USD’s 2-Year Low a Crisis or an Opportunity? 25.01.10

Hello, this is Greedy All-Day.
Today’s analysis focuses on AUD/USD.

Daily Chart Overview



Looking at the daily chart, AUD/USD has reached the orange box zone, a critical level where the next direction will likely be decided.

Scenario 1: If the support holds, a rebound is expected.
Scenario 2: If the support fails, a decline toward the green box zone, or potentially lower, could occur.

The strong rebound from the green box in the past was supported by U.S. COVID-related policies. Without such external factors now, a failure of the orange box support could lead to unpredictable further declines, with recovery timelines also uncertain.

Weekly Chart Insights



On the weekly chart, the orange box level is notable for how rarely it has been tested, historically appearing approximately once every 10 years.

In 2022, AUD/USD rebounded from this level.
Now, just 2 years later, the price has returned, deviating from the typical cycle.
This could signal a potential shift in trend.

Key Observations:

Historically, 0.617 has served as a strong support, keeping the price above this level.
However, there’s now a possibility of entering the blue box zone, just below 0.617.
If the price breaks below 0.617, it could take years for a recovery. For example, during the last breakdown into the blue box zone, it took approximately 5 years for AUD/USD to reclaim 0.617. A similar prolonged recovery may occur this time.

What Needs to Happen for a Rebound?



Immediate Recovery:

If the price consolidates near the current level, a breakout above the resistance trendline could occur around January 30, signaling a potential short-term uptrend.
Complete Recovery:

To fully recover, AUD/USD must break and sustain above 0.635.
Resistance at 0.635 is expected due to:
Past support tests near the blue box zone.
The red box breakdown, which triggered a strong bearish candle on December 18, 2024, now serving as resistance.
Without breaking these two levels, a sustained recovery is unlikely.

What If 0.617 Breaks?



If AUD/USD breaks below 0.617, the next major support levels are:

0.6074
0.6006
0.5800
0.5500

Key Recommendation:

The only level worth considering for a reversal trade is 0.5500, due to its history of strong rebounds.
Attempting reversal trades at other levels poses significant risk.

Conclusion

The current support at 0.617 is critical:

A break below this level could open the door to uncharted lows.
It would mark the first time in 4 years that 0.617 is breached.
Historically, 0.617 has been tested once every 10 years, but this cycle has shortened to just 2 years, potentially signaling a downward shift in the long-term trend.

If the trend breaks downward, avoid counter-trend trades. While lower prices may seem extreme, they remain technically possible given the current trajectory.

For a significant recovery, external policy changes will likely play a crucial role. Traders should remain cautious and strategic in navigating this uncertain environment. 🚀