AUD/USD lacks clear direction in the short-term; the long-term downtrend intact.
AUD/USD has lost its positive momentum after the rebound on the 20-month low of 0.7200 on August 15, trading sideways between 0.7236 and 0.7380. In the short-term, the market could retain the range-bound trading as the RSI holds near its 50 neutral level and the MACD remains around zero and close to its red signal line. The bearish trend though could stay in place given that prices continue to fluctuate below the Ichimoku cloud. Still, the bullish Doji created around 0.7200 makes an uptrend possible.
Should the pair stretch south, Friday’s low of 0.7236 could provide immediate support before the pair touches the 0.7200 lows. A significant step lower could bring the bearish sentiment back into play, sending the price probably towards 0.7160, which was a strong barrier back in December 2016. If the selloff extends, attention could then turn to the 0.7100 psychological level.
On the flip side, the 50-day SMA currently at 0.7369 and marginally below the 38.2% Fibonacci of the down-leg from 0.7675 to 0.7200 may halt upside movements as it did a several times from July onwards, shifting some interest to the area. If traders continue to buy the pair, the price could rise until the 50% Fibonacci of 0.7433, while steeper increases could also touch the 61.8% Fibonacci of 0.7486. The latter move would also clearly violate the blue long-term downtrend triggered from the 0.8135 highs, confirming the start of a bullish pattern.
In the medium-term picture, AUD/USD has been trading bearish in the past three months after the close below the 0.7400 round level, with the bearish cross between the negatively sloped 50- and 200-SMA holding since April and hinting that the downtrend is not near to its end. Still, if the pair manages to cross above 0.7675, the bearish outlook could switch into a bullish one.
To sum up, the market is expected to hold neutral in short-term and bearish in the medium-term.
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