AUD/USD gained stronger positive traction this week, with momentum indicators giving the green light for further bullish action in the short term; the MACD is in an uptrend well below its red signal line, while the RSI is speeding up above its 50 neutral level. According to Stochastics though, room for improvement could be limited as the index has already pierced its 80 overbought level.
The rally could get more legs if the market manages to clear the 0.7024-0.7050 congested area, while slightly higher the 50% Fibonacci of 0.7068 of the 0.7392-0.6745 down leg could curb upside corrections as well. Further up, the spotlight will turn to the 200-day simple moving average (SMA) currently at 0.7120.
Should the price slip below 0.70, immediate support could come from the 0.6960 number. Breaking the 20-day SMA (0.6928) too could open the door for the 0.6898 level, where any violation may trigger another rundown towards the 0.6864 level.
In the meantime, the medium-term traders who look at the three-month picture continue to face a bear market. A decisive close above the 50-day SMA would shift the outlook back to neutral.
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