AUD/USD Forecast: stage set for minor rally to 0.75

The daily chart shows the AUD/USD pair has created a bullish price-relative strength index (RSI) divergence at the long-term support of 0.7327 (61.8 percent Fibonacci retracement of Jan 2016 low - Jan 2018 high).
The weekly chart shows back-to-back candles with long tails (wicks).

Omkar Godbole FXStreet Contributor

Daily chart

The pair jumped above 0.74 on Friday, confirming a bullish price RSI divergence on the daily chart. It indicates a short-term bullish reversal, i.e. the sell-off in the AUD/USD pair has likely ended at 0.7327 (61.8 percent Fibonacci retracement of Jan 2016 low - Jan 2018 high) and the bulls will likely make a comeback this week.

The bullish RSI divergence also adds credence to signs of bearish exhaustion as indicated by the previous two weekly candles.

Weekly chart

Last week's candle had a long tail, which indicates dip demand around 0.7327 (61.8% Fib) and also validates the previous week's dragonfly doji - a bullish pattern that occurs at the end of the downtrend.

Cleary, the stage is set for a minor rally to 0.75 (downward sloping 10-day moving average).

Only a daily close below 0.7327 (61.8% Fib) would abort the bullish view.

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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