AUD/USD edges lower below moving averages; outlook still strongly bearish.
AUD/USD is holding above the 32-month low of 0.7040 but remains under pressure as it has failed to climb above the 20-simple moving average (SMA) in the daily timeframe. The price is trying to post a bullish correction and may challenge again the long-term descending trend line, which has been holding since January 26. The technical picture supports that the next movement is not clear yet. The RSI indicator is pointing slightly to the downside in the negative territory, while the MACD oscillator posted a bullish crossover with the trigger line in the bearish zone.
If there are further positive pressures, a re-touch of the diagonal line to the upside is possible, but first, the pair needs to surpass the 20- and 40- SMAs at 0.7163 and 0.7190 respectively in the short-term. A break to the upside of the aforementioned key line would shift the bearish view to a more neutral one and bring the 0.7300 psychological level into view, which coincides with the 23.6% Fibonacci retracement level of the down-leg from 0.8135 to 0.7040. More advances could open the way towards the 0.7380 level, taken from the high on August 21.
Alternatively, should a downside tendency take form again, immediate support will likely come from the 32-month low of 0.7040. A drop below this level would reinforce the downside risk and send prices until the 0.7000 round number, last reached in January 2016, creating a lower low in the downward trend.
To summarise, the very short-term bias is tilted slightly to the upside, while in the long-term, AUD/USD maintains a clear bearish outlook.
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