AUD/USD hit support at 0.7380 yesterday, rebounded and today, it managed to overcome Friday’s high of 0.7440, thereby confirming a forthcoming higher high. Overall, the pair continues to print higher highs and higher lows above the upside line drawn from the low of September 29th, while since October 11th, it’s been trading above the downside resistance line taken from the high of May 10th. All these technical signs paint a positive short-term picture, in our view.
At the time of writing, the rate is testing the 0.7478 barrier, marked by the high of September 3rd, where a break may invite more buyers into the action, who may decide to push towards the 0.7533 zone, marked as a resistance by the high of July 7th. If they are not willing to stop there, we may experience advances towards the peak of the day before, at 0.7600.
Shifting attention to our short-term oscillators, we see that the RSI moved higher, but hit the 70 line and ticked down, while the MACD remains above both its zero and trigger lines. Both indicators detect strong upside speed and support the case for further advances, but the fact that the RSI ticked down after hitting 70, suggests that a small setback could be possible before the next leg north.
On the downside, we would like to see a clear dip below 0.7290 before we start examining whether the outlook has turned negative again. The rate would return below both the aforementioned diagonal lines, and the bears may get encouraged to shoot for the 0.7225 area, marked by the low of October 6th. Another break, below 0.7225, could carry extensions towards the low of September 29th, at around 0.7170.
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