AUDUSD surged above the 6-week-old steep descending trendline and the restrictive red Tenkan-sen line on Wednesday, raising hopes that the downward pattern has finally found a bottom and it’s time for a bullish reversal.
The momentum indicators witness improvement in buying sentiment as the MACD is distancing itself above its red signal line, the Stochastics slope upwards, and the RSI is ramping up to meet its 50 neutral mark. Yet, today’s resistance around the 20-day simple moving average (SMA) at 0.7180 and the 38.2% Fibonacci barrier positioned near the 0.7200 psychological mark, could feed some caution among traders in the near term.
A decisive close above 0.7200 may lead the price straight to the 50% Fibonacci of 0.7274, a break of which could initially see a test around the 50-day SMA before stretching towards the 61.8% Fibonacci of 0.7376.
On the downside, a step below the 23.6% Fibonacci of 0.7126 could immediately seek support around the broken ascending trendline seen at 0.7070. Should the bears claim that territory too, all eyes will turn again to the 0.6990 bottom. Failure to change course here could bring the 0.6900 mark under examination ahead of the 0.6830 handle taken from June’s 2020 limitations.
Summarizing, AUDUSD is facing an improving bias in the short-term picture, with the bulls aiming for a close above 0.7200 to stage another extension higher.
