AUD/USD dropped sharply to as low as 0.8069 last week and drew some support from 38.2% retracement of 0.6008 to 0.9404 at 0.8107 and turned sideway. Some sideway trading might be seen initially this week. But upside should be limited below 0.8715 support turned resistance and bring another fall. Below 0.8069 will target next key support level at 0.7702.
In the bigger picture, while the decline from 0.9380 is steep, it's still treated as a correction to medium term up trend from 0.6008. Hence, we're expecting strong support from 0.7702 (50% retracement of 0.6008 to 0.9404 at 0.7706), at least initially, to bring rebound. But after all, break of 0.8715 support turned resistance is needed to indicate that fall from 0.9380 is completed. Otherwise, more downside would remain in favor.
In the longer term picture, long term correction from 0.9849 has likely completed at 0.6008 already, after being supported slightly above 76.4% retracement of 0.4773 (01 low) to 0.9849 (08 high). Rise from 0.6008 is possibly developing into a new up trend which extend the long term rise from 0.4773. We'll continue to favor the long term bullish case as long as 0.7702 support holds and expect an eventual break of 0.9849 high. However, a break of 0.7702 support will firstly argue that whole rise from 0.6008 has completed. Secondly this will open up the case that AUD/USD is in phase of a long term consolidation and will gyrate in the large range of 0.6008/0.9849 for some time.