AUDUSD had a considerable advance over the previous three days, driving the price towards a new five-month peak of 0.6982 after the penetration of the long-term descending line, which had been holding since December 2018. Currently, the price is retracing towards the diagonal line, increasing the case for more losses if the line fails to act as support.
According to the momentum indicators provide a mixed picture. The RSI, in the overbought zone, is suggesting a potential downside correction in the near term, as it is retreating, while the MACD, in the bullish area, is continuing its upside movement above its red trigger line. Additionally, the red Tenkan-sen line is standing above the blue Kijun-sen line, suggesting further gains.
In case the pair moves higher, the bulls would probably challenge the previous top of 0.7030, registered on December 2019 and the 0.7080 barrier. A break higher could pause within 0.7205 and 0.7295, taken from the highs on April and February 2018 respectively.
Alternatively, a downward reversal may drive the market towards the 0.6800 handle before the 0.6685 support, which is near the upper surface of the Ichimoku cloud, which comes into view. Beneath the latter, the 23.6% Fibonacci retracement level of the up leg from 0.5506 to 0.6982 at 0.6637, which overlaps with the 200-day simple moving average (SMA), could be another level in focus ahead of the 20- and 40-day SMAs at 0.6610 and 0.6506 correspondingly.
Overall, AUDUSD has been a bullish mode after the significant rebound off the 17½-year low of 0.5506 on March 19. The short-term bias is positive and any rising move above yesterday’s peak may change the medium-to-long-term bearish mode first to neutral.
