• AUD/USD is pulling back within a short-term downtrend. 
• The correction is quite shallow and will probably run out of steam and lead to a resumption of the bear trend. 

AUD/USD reversed trend at the August 29 highs and started declining. The pair has since established a sequence of falling peaks and troughs which indicates the short-term trend has probably reversed and is now bearish. 

Given it is a cornerstone of technical analysis theory that “the trend is your friend” the odds now favor an extension of the downtrend to lower lows.  

AUD/USD 4-hour Chart

AUD/USD bottomed at 0.6685 on September 4 and has been pulling back higher in a counter-trend reaction since. This correction has been quite shallow, however, and it will probably soon run out of steam, after which bears will push price lower again in line with the trend. 

A break below the 0.6685 low would confirm a continuation of the downtrend. The next target below that is 0.6645, followed by 0.6587, the Fibonacci 0.50 ratio retracement level of the August rally.