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.

Joaquin Monfort FXStreet

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.

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