AUDUSD is edging higher after the plunge beneath the long-term ascending trend line, flirting with the 40-day simple moving average (SMA). The stochastics are moving north after the rebound off the oversold zone, while the current price movement above the Ichimoku cloud is another encouraging signal. Yet, the MACD oscillator is losing momentum around the zero line, suggesting that some caution remains in the market.
A successful step above the 20- and 40-day SMAs could face immediate resistance from the 0.7940 barrier ahead of the more than three-year high of 0.8006. If buying interest persists, the price could hit the 0.8130 hurdle, registered in January 2018.
On the flip side, if the price extends its decline below the uptrend line, it could meet the 0.7570 and 0.7464 support levels. Further losses could send the pair towards the 23.6% Fibonacci retracement level of the upward wave from 0.5505 to 0.8006 at 0.7415 and then towards the strong 200-day SMA currently at 0.7320.
Briefly, the decline beneath the diagonal line opened the door for a bearish correction, though the bearish breakout was not strong enough to breach the Ichimoku cloud and the 200-day SMA. Hence, in the bigger picture, the structure remains bullish.
