AUD/USD has been in a recovery mode since yesterday, when it hit the upside support line drawn from the low of April 1st. Today, the pair moved above Friday’s high of 0.7787, but failed to reach the next resistance at 0.7820, and pulled slightly back. In any case, as long as the pair continues to trade above that upside support line, we would consider the short-term outlook to be positive.
We believe that the bulls may take charge again soon and perhaps push the action above the 0.7820 hurdle, marked by the inside swing low of May 11th. This is likely to pave the way towards the high of that day, at 0.7856, the break of which may extend the advance towards the peak of the day before, at around 0.7890.
Looking at our short-term oscillators, we see that the RSI lies above 50, but has just ticked down, while the MACD remains above both its zero and trigger lines. Both indicators detect positive momentum and support further advances, but the fact that the RSI ticked down suggests that some further pullback may be possible before the next positive leg, perhaps for the rate to test Friday’s high of 0.7787 as a support this time.
Nonetheless, in order to abandon the bullish case and start examining a bearish reversal, we would like to see a dip below yesterday’s low of 0.7732. This would not only take the rate below the aforementioned upside line, but would also confirm a forthcoming lower low on the 4-hour chart. The bears may then target Thursday’s low of 0.7687, where another break may extend the slide towards the 0.7661 barrier, defined as a support by the inside swing high of April 9th.
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