AUDUSD has almost recouped the downfall from the 2 ½-year high of 0.7638 despite the narrow trading the past two days in the four-hour chart.
Although some weakness could be possible in the near term given the touch around the upper Bollinger band, market sentiment remains largely positive as the RSI holds comfortably above its 50 neutral mark despite the latest pullback, and the MACD continues to strengthen within the bullish territory and above its red signal line. The Ichimoku indicators are also backing this view as the red Tenkan-sen line keeps sailing upwards and well above the blue Kijun-sen line.
The upper surface of the cloud has been an important support region during the past two days, and should it hold active, the pair could crawl towards the key 0.7638 – 0.7675 restrictive region. Beyond that, the door would open for the 0.7715 – 0.7750 zone.
In the event the price slips into the cloud, the middle Bollinger band at 0.7568, which is also the 20-period simple moving average (SMA), could prevent a test at the bottom of the cloud currently seen around 0.7518. Failure to do so could generate additional losses towards the swing low of 0.7460 registered on December 21, where any step lower would reduce confidence in the uptrend in the bigger picture.
In brief, AUDUSD, although a bit weaker, seems to have more room for improvement, with the 0.7638 – 0.7675 area remaining under the spotlight.
