AUD/USD takes a break during its uptrend
- AUD/USD is taking a breather after a strong rally.
- It is biased to continue rising in line with the trend once the consolidation ends.
- The RSI is overbought but has not yet given a sell signal.
AUD/USD has established a sequence of rising peaks and troughs on the 4-hour chart since it recovered from the August 5 lows. The sequence of higher highs and lows is indicative of a short-term uptrend, which given “the trend is your friend” is biased to continue.
AUD/USD 4-hour Chart
The pair has stalled over the last few periods and started to trade sideways in the 0.6730s. A close above 0.6740, however, would probably indicate the start of a continuation higher.
Further resistance lies at 0.6760 followed by 0.6799, the July 11 high.
The Relative Strength Index (RSI) is in overbought territory, increasing the chances of a pull back. For confirmation of a correction in price, however, the RSI would have to exit overbought and re-enter neutral territory.
Despite the overbought RSI, AUD/USD could still go higher, although long holders are not advised to add to their existing positions whilst RSI remains above 70.
Author
Joaquin Monfort
FXStreet
Joaquin Monfort is a financial writer and analyst with over 10 years experience writing about financial markets and alt data. He holds a degree in Anthropology from London University and a Diploma in Technical analysis.
