AUD/USD traded lower on Friday, falling below the 0.7100 level to hit support near the 0.7070 zone, marked by the low of the 31st of October. Then, it rebounded somewhat. The price structure on the 4-hour chart is lower peaks and lower troughs below the tentative downtrend line drawn from the peak of the 4th of December. However, the daily chart paints a trendless picture and thus, we would consider the near-term outlook to be cautiously bearish for now.
If the selling momentum continues and the bears manage to break the 0.7070 hurdle, then we may see them targeting the 0.7020 area, defined by the low of the 26th of October. That said, we would like to see a clear daily close below that hurdle before we get confident on larger declines. Such a break would bring the rate into territories last seen in February 2016 and could open the path for the lows of the 9th and 11th of that month, at around 0.6975.
Turning our gaze to our short-term oscillators, we see that the RSI turned down and currently looks ready to fall back below its 30 line, while the MACD lies below both its zero and trigger lines, pointing south as well. These indicators detect accelerating downside momentum and support the notion for further declines, at least towards the 0.7020 obstacle.
On the upside, we would like to see a clear break above 0.7150 before we start examining whether the short-term picture has changed to a somewhat positive one. Such a move could also confirm the break of the aforementioned tentative line and could see scope for extensions towards the 0.7200 zone, near the highs of the 18th and 19th of December. Another break above 0.7200 may allow the bulls to travel towards our next resistance, at around 0.7245, marked by the peak of the 13th of the month.
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