AUD/USD is positioned at a crucial point in the four-hour chart. The pair closed marginally above the 200-period simple moving average (SMA) and managed to pierce the upper boundary of its one-month-old range early on Thursday before pulling downward slightly.
The MACD cautiously suggests a bullish bias for the short-term as the indicator is still in the positive direction but near former peaks. The RSI, however, seems to be slowing down above its 70 overbought level and the fast-Stochastics have already started to turn lower in the overbought zone – both increasing the odds for a downside correction.
A decisive rally above the 0.6820 level could ease worries of a backward move and shift attention towards the 0.6864 resistance level. Beyond the latter, traders could look at 0.6910, while higher 0.6960 could be another barrier to watch.
Alternatively, a sharp decline below 0.6796 could activate more selling, with the price heading down to meet the 0.6745 handle, where the 50-period SMA happens to lie at the moment. Breaking lower and under the 0.6720-0.6700 region, the spotlight will turn to the recent troughs around the 0.6687 mark and the 10 ½-year low of 0.6676.
In brief, the recent rebound in AUD/USD is currently viewed as fragile, as the market looks to be trading in overbought waters. Yet, if the price extend comfortably beyond the 0.6820 critical level and the 200-period SMA, violating the sideways move, buying confidence could strengthen further.
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