AUD/USD possibility of a bullish correction in short-term after touching 18-month low.
AUD/USD reversed back to the upside over yesterday’s trading session following the rebound on the 18-month low of 0.7310. However, the price seems to be under strong bearish pressure as it remains below the 0.7475 resistance level and the 20- and 40-simple moving averages (SMAs) in the daily timeframe.
From the technical point of view, the momentum indicators are endorsing a potential upside correction in the near-term. The Relative Strength Index (RSI) is heading slightly higher towards the neutral threshold of 50, while the MACD oscillator jumped above the trigger line in the bearish zone, suggesting a possible retracement too.
In case of further gains, the next resistance for investors to have in mind is the 0.7475 barrier, taken from the bottom on May 31, but the pair first needs to surpass the mid-level of the Bollinger Band. If there is a jump above this level, the price could challenge the 23.6% Fibonacci retracement level of 0.7503 of the down-leg from 0.8135 to 0.7310, which holds near the 40-day SMA. Above this region and a break of the descending trend line, the focus shifts to the upside until the 38.2% Fibonacci of 0.7625, which stands near the upper Bollinger Band.
Conversely, should prices dip lower again could open the way towards the 0.7160 hurdle, identified by the trough on December 2016. There are no significant support obstacles before that level.
Overall, the short-bias is looking slightly bullish, though caution is warranted in the medium-term as there are signs of a possible new multi-month low after the upside correction. In addition, AUD/USD has been developing within a descending move since January 26.
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