AUDUSD declined after testing a fresh multi-year high of 0.8065 on July 27. The pair struggled to sustain gains above the key 0.8000 psychological level. The market was overextended on the daily chart as indicated by the RSI which rose above 70 into overbought territory.
Momentum signals have shifted to the downside – RSI and MACD are sloping down, suggesting that AUDUSD will most likely have trouble progressing significantly higher at this point. Major resistance is now at 0.8000. Clearing the 0.8065 peak would see a resumption of the recent uptrend.
The level at 0.7888 held as support for the past three weeks and is currently being tested. It is the 23.6% Fibonacci retracement level of the rise from 0.7328 to 0.8065. A daily close below it would likely mean further slippage towards 0.7781 – the 38.2% Fibonacci and July 18 low. From here, the 50% Fibonacci at 0.7695 is expected to provide support. Reaching this level would bring the longer-term market structure to neutral from the current bullish picture.
The overall technical landscape remains bullish. The crossover of the 50-day with the 200-day moving average on July 14 gave a bullish signal. RSI and MACD are in bullish territory. Meanwhile, the short-term bias is neutral to bearish. While downward momentum is increasing (as the RSI and MACD indicators decline), clearer signals are needed to determine the outlook for AUDUSD.
