AUDUSD turned positive after its downfall to the new 19-month low of 0.7200 in the previous week. The pair posted four straight bullish days and trades within the 40-day simple moving average (SMA) and the mid-level of the Bollinger Band (20-day SMA). In the short-term, the upward rally is likely to be continued as the RSI strengthens to the upside to break the 50 level and the MACD deviates further above its red signal line towards the zero line.
In case the pair extends gains, the price could meet resistance at the 23.6% Fibonacci retracement level of the dowleg from 0.8135 to 0.7200, around 0.7420. A break above this obstacle, would violate the medium-term descending trendline and hence ease downside pressures, confirming the start of an uptrend. Above from here, the next level for investors to have in mind is the 0.7475 resistance, which overlaps with the upper Bollinger Band.
Should the market head lower, support could be met between the lower Bollinger band at 0.7225 and the 19-month low (0.7200). A daily close below this zone could send the price towards the 0.7160 support, identified by the bottom on December 2016. Then, if the market fails to hold above this level as well, the next stop could come at the strong psychological level of 0.7000, taken from the lows on February 2016.
In the medium term, the bearish outlook remains intact, with all moving averages pointing to the downside. However, should prices jump above the downtrend line, which has been standing since January 26, this would shift the picture to a more positive one.
Origin: XM
