AUD/USD Price Analysis: Rises above 50-HMA, bull reversal in the making?
- The sell-off in the AUD/USD seems to have run out of steam.
- The pair is currently trading above the 50-hour average.
- A close above 0.6765 would confirm a bullish reversal candlestick pattern on the daily chart.
AUD/USD has moved above the 50-hour moving average (HMA) in Asia, but the bulls are not out of the woods yet. A daily close above 0.6765 is needed to confirm a bullish reversal pattern.
Long-tailed candle
The pair created a long-tailed candle on Tuesday, signaling bearish exhaustion. If the follow-through is strong in the form of a convincing close above 0.6765 on Wednesday, a bullish reversal candlestick pattern would be confirmed on the daily chart.
At press time, AUD/USD is trading at 0.6772 - above Tuesday's high of 0.6765, where the 5-hour MA is currently placed. If a bullish close remains elusive, the pair could trade in a sideways manner for a few days.
Meanwhile, acceptance under Tuesday's low of 0.6737 would imply a continuation of the sell-off from the Jan. 2 high of 0.7016.
The Australian inflation data for December bettered estimates, forcing markets to scale back expectations for an RBA rate cut on Feb. 4. Further, the futures on the S&P 500 are pointing to risk reset. AUD/USD, therefore, is more likely to print a bullish close above 0.6765.
A bearish close may be seen if the US Federal Reserve sounds hawkish, yielding a broad-based US dollar rally.
Daily chart
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Trend: Bullish
Technical levels
Author
Omkar Godbole
FXStreet Contributor
Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.
