AUD/USD has been in a rising mode since Wednesday, when it hit support near the crossroads of the 0.7655 level and the lower end of a downside channel that’s been containing the price action since the beginning of February. The fact that the rate continues to trade within that channel keeps the short-term outlook negative in our view. Nevertheless, given that the latest recovery started after the rate tested the lower bound of the channel, we believe that the pair may be poised to continue trading north for a while more.
Currently, AUD/USD looks to be heading towards the 0.7715 resistance line, where a decisive break could see scope for extensions towards our next resistance obstacle of 0.7755. Another move above that barrier could pave the way towards 0.7785.
Looking at our short-term oscillators, we see that the RSI edged north and just poked its nose above its 50 line, while the MACD, although negative, lies above its trigger line and looks to be heading towards zero. What’s more, there is positive divergence between both these indicators and the price action. These momentum signs corroborate our view that there is a decent likelihood for the pair to continue its recovery for a bit more.
On the downside, we would like to see a clear dip below 0.7655 before we assume that the recovery is over, and that the bears are back in the driver’s seat. Such a move could set the stage for our next support territory of around 0.7580.
