AUDUSD has been making lower highs and lower lows since the end of January when it touched a more than a 2 ½ -year high of 0.8135, pausing this downtrend at 3-month lows over the past week. The technical indicators, though, continue to send bearish signals, suggesting that the softness in the market is not over yet.
The RSI has flattened near oversold levels, slightly above 30 indicating that the market could weaken a little bit in the short-term until the index falls below that threshold. Stochastics are not yet in oversold territory either, with the indicators moving downwards and are negatively aligned, while the MACD supports a bearish picture as well, since the index continues to increase negative momentum below its red-signal line. Ichimoku indicators also raise bearish flags as the red Tenkan-sen line is below the blue Kijun-sen line and is currently pointing to the downside.
Should prices decline, immediate support could be found around 0.7650, an area which has provided both resistance and support from October to December. Then a leg below that level, the pair could meet the 0.7600 psychological level before the focus shifts to 0.7500, the lowest level reached since June 2017.
However, if the market manages to pick up speed, the 20-day simple moving average at 0.7768 could offer nearby resistance ahead of the 200-day SMA which currently stands at 0.7807. A significant close above the latter would break the 50% Fibonacci of 0.7818 of the upleg from 0.7500 to 0.8135, raising chances for further increases. In this case, prices could climb towards the 50-day SMA at 0.7851.
In the medium-term, the outlook remains negative since prices hold below all the moving average lines and the bearish cross between the 20- and the 200-day SMA stays in place.
Origin: XM
