AUD/USD overextended but making higher highs

AUD/USD has been building up a bearish case of late, and traders may be looking to take some profit off the table.

On a 4-hour chart, the 50-period is well distanced above the 200-period SMA and the Relative Strength Index has been, on average, above the 50% mark over the last three weeks.

The recent attack on highs, coupled with the acceleration of the rally has caused this indicator to enter the overbought zone above 75%. This is a less frequent event in this time frame and is often associated with 5th waves. AUD/USD spot would have to gravitate towards the 50 SMA at a minimum to alleviate immediate upside pressures.

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