AUDUSD started the day with strong positive momentum, quickly recouping yesterday’s mild losses to peak marginally above the 20-day simple moving average (SMA) and the 0.6962 level, which previously was unbreakable. That is also where the 38.2% Fibonacci retracement of the latest upleg resides.
The momentum indicators cannot guarantee that the bullish correction will continue. Despite the sharp rebound in the stochastics, the RSI has just ticked above its 50 neutral mark, while the MACD remains muted and negative below its red signal line.
Hence, traders may wait for a durable move above the 0.6962 resistance and the 20-day SMA before they raise their buying orders towards the 23.6% Fibonacci of 0.7028 and the tentative descending trendline at 0.7048. Another successful step higher may open the door for the 200-day SMA at 0.7130, while not far above, the resistance line drawn from the 2021 top of 0.8006 might be worthy to watch as well around 0.7170.
On the downside, a break below the 0.6875 – 0.6825 territory and the tentative short-term ascending trendline could initially seek support near the 0.6745 boundary. If not, the sell-off could reach the 26-month low of 0.6680, where any violation is expected to pressure the price fiercely towards the 0.6550 barrier taken from April-May 2020.
In short, despite its latest bullish efforts, AUDUSD has yet to secure buying confidence. For that to happen, the pair will need to advance above 0.7048 and then close sustainably above the 200-day SMA.
