AUD/USD traded higher on Friday, after hitting support near the 0.7253 zone overnight. The pair was on a sliding mode since Tuesday, but overall, it remains above the uptrend line drawn from the low of June 15th. Thus, we would treat the latest retreat as a corrective phase, and we would consider the near-term outlook to still be positive.
That said, in order to get confident over a trend continuation, we would like to see the current rebound extending above the 0.7300 barrier, which is marked as a resistance by Wednesday’s low. Such a move may encourage the bulls to aim Monday’s low, at around 0.7340, where another break may set the stage for extensions towards the 0.7415 area, marked by Tuesday’s high.
Shifting attention to our short-term oscillators, we see that the RSI, although below 50, rebounded from near its 30 line, while the MACD, even though below both its zero and trigger lines, shows signs of bottoming as well. Both indicators detect slowing downside speed and suggest that the rate may start gaining positive momentum soon. All this is inline with the notion of further recovery.
Now, in order to start examining the bearish case, we would like to see a strong dip below 0.7205, marked by the inside swing high of August 24th. This will also take the pair below the aforementioned uptrend line and may allow declines towards the 0.7140 zone, which provided decent support on August 20th and 21st. The bears may decide to take a break after testing that zone, thereby allowing the rate to rebound somewhat. That said, if AUD/USD stays below the uptrend line, we would see decent chances for another leg south, which could result in the violation of the 0.7140 obstacle. The bears may then drive the battle towards the low of August 12th, at 0.7110, or the low of August 3rd, at 0.7075.
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