AUD/USD traded somewhat lower on Monday, after it hit resistance near the crossroads of the 0.6800 barrier and the downside resistance line drawn from the high of November 7th. Although the rate continues to trade below that downside line, since November 14th, it’s been failing to go for a lower low. Thus, we would adopt a cautiously-bearish stance for now.
In order to get confident on decent bearish extensions, we would like to see a decisive dip below 0.6770. Such a dip would confirm a forthcoming lower low and may initially aim for the 0.6750 zone, marked by an intraday swing low of October 16th, and is also slightly below the low of the day after. If that barrier is not able to halt the slide, then we may experience extensions towards the 0.6725 territory, near the low of October 16th.
Looking at our short-term oscillators, we see that the RSI turned down after hitting resistance slightly below 50, while the MACD, although above its trigger line, lies within its negative zone and shows signs that it could also turn down. Both indicators suggest that the rate may have started gaining some downside speed, but as we already noted, we prefer to wait for a dip below 0.6770 before we trust larger declines.
On the upside, a move above 0.6815 may confirm the break above the downside line drawn from the high of November 7th, and could initially target the 0.6835 barrier, which is marked by the high of November 19th. If the bulls are not willing to stop there, then a break higher may allow them to put the 0.6860 barrier, which is fractionally below the inside swing low of November 7th, and slightly above the highs of November 12th and 13th.
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