AUDUSD turned red after facing a strong rejection around the 0.6500 level on Wednesday. Notably, the pullback took place at the crossroads of two constraining lines, signaling a potential downside reversal.
The technical oscillators reflect a neutral-to-bearish bias as the RSI is sliding gradually below its 50 neutral mark and the stochastics are changing direction to the south. Meanwhile, the MACD remains muted marginally below its zero line.
The 23.6% Fibonacci retracement of the 0.7136-0.6139 downleg could provide immediate protection against selling pressures along with the 20-day MA around 0.6397. Otherwise, the price could tumble towards last week’s support of 0.6280. Even lower, the bears will attempt to worsen the broad negative outlook below the 30-month low of 0.6169 and towards the 0.6070-0.6000 region taken from March 2020.
A bounce on 0.6397 will push for an extension above the 0.6460-0.6500 key zone, where the two lines are currently positioned. Yet only a sustainable close above the 38.2% Fibonacci of 0.6538 would confirm a bullish inverse head and shoulders pattern, likely fortifying buying appetite up to the 50% Fibonacci of 0.6652. Then another successful battle with the 0.6700 handle could bring the 0.6770 barrier next into view.
In short, downside risks remain intact in AUDUSD following the latest failure near 0.6500. Unless the 0.6397 number comes to the rescue, the sell-off may continue.
