AUDUSD is pointing to the downside again after its bullish attempts to close above the red Tenkan-sen line at 0.7531 and run beyond the 0.7600 resistance vanished on Tuesday.
The RSI has reversed course as well, unable to create a higher high in the bearish territory, while the MACD has resumed its negative momentum below its red signal line, both painting a blurry picture for short-term trading.
Of note, the 20- and 200-day simple moving averages (SMAs) have completed a bearish cross for the first time since January 2020, dashing any hopes of a trend improvement. The narrowing distance between the 50- and 200-day SMAs is something to keep a close eye on too in the coming sessions.
The spotlight is now on last week’s low of 0.7444. A decisive close below it would downgrade the short- and medium-term market structure, bringing the 0.7400 level next into focus. This is also where the 23.6% Fibonacci retracement of the 2020 uptrend is positioned. Hence, failure to hold above it may activate fresh selling, likely towards the next support region of 0.7338. A step lower from here is expected to feed a more aggressive decline towards the 0.7255 – 0.7230 zone, while not far below the restrictive line drawn from the peaks in January 2021 may boost bullish pressures as it did back in April.
On the upside, a close above the red Tenkan-sen line currently at 0.7524 and the 0.7600 mark is still required to challenge the 0.7645 barrier. Unless the 50-day SMA blocks the way, the rally could accelerate towards the 0.7700 number, which has been limiting upside and downside corrections since February. Yet, for an outlook improvement, the pair would have to spiral through a long distance in order to peak above 0.8000.
Summarizing, AUDUSD remains in the bearish territory. A successful extension below 0.7440 could raise negative risks, with support expected to emerge within the 0.7400 – 0.7338 zone.
Origin: XM
