AUD/USD stable but negative risks still hanging in the background

AUDUSD has been lacking direction over the past few days, resting between the 50% and the 61.8% Fibonacci of the upleg from 0.7020 to 0.7392. The technical indicators, though, support prospects for an extension of the recent bearish move, with the red Tenkan-sen line pointing strongly to the downside and below the blue Kijun-sen line. The MACD is also supportive of this view, increasing negative momentum below zero its red signal line.

On the downside, the market may try to break the 61.8% Fibonacci of 0.7160, while slightly lower the previous low of 0.7150 should be In focus as well, as this is located below the Ichimoku cloud and hence any decisive close below that point could confirm that the sell-off is not over yet. Should the latter fail to hold, support could run towards the 0.7084 barrier, identified by the September 11 trough.

Alternatively, a push beyond the 50% Fibonacci of 0.7200 may find immediate resistance around the 38.2% fibo of 0.7250, while a stronger obstacle could appear near 0.7300 (23.6% Fibonacci), where the market paused several times in the past. Higher than that, traders would be eagerly looking for a close above the 0.7392 top and hence above the 200-day simple moving average to take more positioning.

In the medium-term picture, the market continues to trade neutral between 0.7392 and 0.7020 over the past three months. A significant break of the 0.7020 bottom would resume the long-term downtrend and therefore shift the outlook back to bearish, while a step above the 0.7392 top could be a sign that the recent fall was temporary, and an uptrend is in progress.

Summarizing, AUDUSD holds neutral both in the short and medium-term picture.