AUD/USD analysis: long term downward potential limited

AUD/USD Current price: 0.7615

After rallying for four consecutive days, the AUD/USD pair corrected lower last Friday, ending the week, however, strongly higher at 0.7615. The pair peaked at 0.7674, as Central Banks' inaction pushed commodities and stocks higher, favoring the antipodean currency. The downside was contained ahead of the critical 0.7600 level that stands for the 23.6% retracement of the yearly rally seen between January and April. Technically, the daily chart shows that the price is not only above the mentioned level, but also above a bullish 20 SMA, although technical indicators have turned south around their mid-lines, suggesting that a break below 0.7600 will result in further declines. Considering that the latest weekly recoveries have resulted in lower highs, chances of a bearish breakout have grown, although the price needs to break below 0.7450, the 38.2% retracement of the mentioned rally, to confirm so. Shorter term, and according to the 4 hours chart, the downward risk is now limited, as the price is holding above a strongly bullish 20 SMA, whilst technical indicators are posting modest bounces from their mid-lines. Still an advance beyond 0.7645, the immediate resistance, is required to see the pair regaining some upward strength.

Support levels: 0.7600 0.7570 0.7530

Resistance levels: 0.7645 0.7690 0.7735

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