AUD/USD traded higher yesterday, after hitting support at 0.7150. However, the recovery remained limited slightly below the 0.7200, and then it retreated somewhat. Overall, since January 6th, the rate has been consolidating between those two barriers, but at the same time, it remains below the prior upside support line drawn from the low of December 3rd. Therefore, we see more chances for the pair to exit the short-term range to the downside rather than to the upside.
A clear and decisive dip below 0.7150 would confirm a forthcoming lower low on the 4-hour chart and may encourage the bears to dive towards the 0.7090 zone, which acted as a key support between December 14th and 20th. If they are not willing to stop there, we could see them targeting the low of November 30th, at 0.7062, the break of which could see scope for declines towards the round figure of 0.7000, or slightly lower, to the low of December 3rd, at 0.6993.
Shifting attention to our short-term oscillators, we see that the RSI turned down after hitting resistance at 50, while the MACD, although above its trigger line, is negative and appears ready to turn down soon. Both indicators suggest that the rate may start gaining downside speed soon, and add to our view of more chances for a break below 0.7150, rather than a rebound above 0.7200.
In order to start examining the bullish case, we would like to see a strong break above the 0.7290 barrier, which is marked by the highs of November 18th and 21st. This would confirm a forthcoming higher high on both the 4-hour and daily charts and may encourage advances towards the 0.7365 zone, marked by the highs of November 15th and 16th, or towards the peak of November 10th, at 0.7393. If neither territory is able to stop the bulls, then we could see them climbing towards the high of November 8th, at 0.7433.
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