AUDUSD has been neutral since late October and has been capped by the 200-day moving average and supported at the key 0.7500 level. The medium-term downtrend from the 0.8124 peak on September 8 remains in progress and has not shown any signs of reversal. The crossover of the 50-day MA below the 200-day MA is a bearish signal.
The stochastic oscillator reached above 80 indicating the market became overbought after the sharp rally from 0.7500 on December 11 to 0.7694 on December 15. Consequently, AUDUSD entered a consolidation phase, as indicated by the RSI which is now neutral.
The short-term outlook has improved since the rebound off 0.7500 took place. But there would need to be a strong impetus to breach the resistance at the 200-day MA (0.7694). A successful break of this barrier would open the way towards the key 0.7900 handle and then target 0.8000. Rising above this critical level would confirm the shift to a bullish trend.
For now, the likelihood of extending higher is fading since the market is overbought. AUDUSD is expected to remain neutral for now with strong support at 0.7500.
