AUD/USD retreats below 20-day SMA; bearish bias in the short and medium-term.
AUD/USD has eased sharply to the downside this week and the 0.7475 resistance level acted as a strong obstacle for the bulls in the preceding weekly session. Moreover, the pair dipped below the 20-day simple moving average (SMA) early in European session today, signaling further downside pressures.
The short-term technical indicators in the daily timeframe are bearish and point to more weakness in the market. The RSI indicator is sloping downwards and stands below the threshold of 50, while the MACD oscillator is strengthening again its bearish momentum and is approaching the red-trigger line.
Should prices drop further lower, this could open the way towards the 18-month low of 0.7310, identified by the trough on July 2. Further downside extensions could drive the pair until the 0.7160 hurdle, taken from the bottom on December 2016. There are no significant support obstacles before that level.
On the flip side, the first resistance for investors to have in mind is the 0.7475 barrier, which stands near the 40-day SMA. If there is a jump above this region, the price could challenge the 23.6% Fibonacci retracement level of 0.7505 of the down-leg from 0.8135 to 0.7310. Above this barrier, if there is an upside penetration of the falling trend line, the focus shifts to the upside until the 38.2% Fibonacci of 0.7625.
To sum up, AUD/USD has been trading within a descending move since January 26 and is in progress to hit again the 18-month low of 0.7310 in the near term.
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