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Earlier today, the Australian Bureau of Statistics (ABS) posted better-than-expected GDP growth numbers for the first quarter of 2021. Nevertheless, the Australian dollar did not rise noticeably on the news.
The general outlook of the AUDUSD continues to be evolving, as selling pressure becomes increasingly more prevalent.
As can be seen on the daily chart above, the AUDUSD continues to be developing a massive Head and Shoulders pattern, which is typically taken to signify likely bearish reversals.
Notice that the Right Shoulder of the broader structure represents a false breakout above the 23.6 per cent Fibonacci retracement level at 0.77690, which was followed by a dropdown below this crucial resistance.
As of late, the price action has been consolidating below this psychological barrier and the 100-day MA (in blue), which underpins the ongoing transition of the underlying market sentiment (from bullish to bearish).
The emergence of a Shooting Star candle and a subsequent Bearish Marabozu (following the release of today's GDP data) further underscores the growing bearish bias in the market.
The first target for this new downtrend is encapsulated by the 38.2 per cent Fibonacci retracement level at 0.76201, which serves as a neckline of the broader H&S pattern. Notice that it is currently being crossed by the 150-day MA (in orange), which serves as a floating support.
If the price manages to break down below 0.76201 decisively, the next target would naturally be the 61.8 per cent Fibonacci retracement level at 0.73794. However, such a dropdown may take some time to unfold because the Stochastic RSI indicator currently signals that the AUDUSD may already be oversold in the short term.
Australia's economy grew 1.8 per cent in Q1, up from the preliminary forecasts for an expansion of 1.5 per cent. Despite this surprising improvement, however, the growth rate fell short of the 3.2 per cent recorded in Q4, which is why the Aussie did not surge on the news.