AUDUSD bulls are staging another breakout as they desperately try to move away from the recent rectangle. However, the February 2, 2023 downward sloping trendline is proving too strong for them, halting twice their advance. This is the bulls’ third attempt to overcome this resistance trendline in the past 35 days.
Gradually, the market momentum is shifting away from the bulls. The Average Directional Movement Index (ADX) appears to be uninterested in the bulls’ efforts and is stuck below its 25-threshold. Similarly, the RSI remains above its midpoint but is failing to make a higher high. More significantly, the stochastic oscillator is edging lower as it prepares to test the support set by its moving average. The outcome of the battle could offer a strong signal on the next AUDUSD leg.
In addition, a double-top pattern appears to be forming with the neckline set at the 0.6595 region. A break below this level is necessary for this bearish pattern to become valid.
Should the bulls finally manage to break the February 2, 2023 downward sloping trendline, they would come up against the 50% Fibonacci retracement level of the April 5, 2022 – October 13, 2022 downtrend at 0.6815. Breaking this level would then open the door for a move towards the 0.7063-0.7091 area.
On the flip side, the bears are preparing for a significant pullback if they successfully defend the February 2, 2023 trendline. They would then have the chance of pushing AUDUSD back inside the aforementioned rectangle and towards the 38.2% Fibonacci retracement at 0.6739. Even lower, they could have a go at the much busier 0.6681-0.6716 range.
To sum up, the February 2, 2023 trendline holds the key to the next AUDUSD leg. If it holds, the bears appear ready to regain market control and stage an aggressive correction.
