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Technical Analysis – AUDUSD bullish tendency in doubt

- Achilleas Georgolopoulos

  • AUDUSD in the green again today, above a key trendline

  • AUD has managed to withstand the recent USD strength

  • Momentum indicators mixed; stochastics could send a bearish signal

AUDUSD is recording another green candle today as the market continues to react positively to the recent data releases from Australia and, in particular, the hotter April inflation print. Although the Fed is not expected to ease before the November Presidential elections, the RBA is seen as the most hawkish of the pack, thus allowing AUDUSD to remain bid. The pair is currently battling the October 26, 2023 ascending trendline and could possibly be on its way to record another higher high.

The momentum indicators appear mixed at this juncture. In more detail, the Average Directional Movement Index (ADX) remains stuck below its 25-threshold, signaling a trendless market, and the RSI is tentatively edging above its 50-midpoint. More interestingly, the stochastic oscillator is trying to move below its moving average, setting a course for a lower low and possibly opening the door to a similar move in AUDUSD.

Should the bulls remain confident, they could try to keep AUDUSD above the October 26, 2023 trendline, and then gradually stage a move towards the July 14, 2022 low at 0.6681. The 38.2% Fibonacci retracement level of the April 5, 2022 – October 13, 2022 downtrend at 0.6739 could be next.

On the flip side, the bears are probably keen to put a stop to the current bullish move by pushing AUDUSD below the October 26, 2023 trendline and towards the 0.6556-0.6562 area, which is defined by the 50- and 100-day simple moving averages (SMAs). If successful, they could then have a go at testing the support set by the 0.6521-0.6532 range that is populated by the 23.6% Fibonacci retracement level and the 200-day SMA.

To sum up, AUDUSD bulls remain in control, but they probably need to rally above the recent peak of 0.6713 to keep the current bullish trend intact.

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