AUDUSD shifted from neutral to bearish after the market reached overbought levels. Prices were unable to sustain gains above the key 0.8000 psychological level and started to decline from the multi-year high of 0.8065.
Downward momentum picked up after RSI fell below 70 and MACD turned back down. There is room for weakness in AUDUSD to extend further and fall below the key 0.7800 level. The 38.2% Fibonacci retracement level of the rise from 0.7328 to 0.8065 is within reach at 0.7782 and is expected to provide support. From here, the 50% Fibonacci at 0.7695 is the next target. Below this, AUDUSD would come under more pressure to drop to 0.7607 (61.8% Fibonacci) and at this point there is scope to slip towards the 200-day moving average. A break below it would act as a catalyst for deeper declines towards the May 9 low of 0.7328 and beyond.
On the upside, resistance is at 0.7887 (23.6% Fibonacci) and the key psychological level at 0.8000. A break back above the 0.8065 peak would indicate that the current bearish phase was a correction of the recent rise from 0.7328 and there would be a resumption of the uptrend.
For now the risk is to the downside, keeping the short-term bearish while the overall technical landscape remains bullish. The price is above the 50-day and the 200-day moving averages and there was a bullish crossover on July 14.
