Technical Analysis – AUDUSD rebounds on 17½-year low; negative momentum fades


Melina Deltas, XM Investment Research Desk

AUDUSD is unable to decisively overrun above the 38.2% Fibonacci retracement level of the bearish wave from 0.7030 to the 17½-year low of 0.5506 to post some significant gains, as positive momentum evaporates. The pair today has declined to the nearby red Tenkan-sen line and the 23.6% Fibonacci of 0.5865, with backing from the technical indicators and the easing simple moving average lines (SMAs).

Most of the short-term oscillators suggest an increase in negative momentum for now. The slightly falling RSI has just moved near its 30 level, while the stochastic oscillator is returning lower before hitting the overbought zone in the short-term. However, the MACD completed a bullish crossover with its trigger line in the negative regions, suggesting a potential upside pullback.

To the downside, immediate support could come from the 23.6% Fibo of 0.5865. Moving lower, the trough of the latest crucial low of 0.5506 – forming the multi-month low – could be revisited. The next hurdle could come from the 0.5270 support, taken from the bottom on August 2002.

Otherwise, if buyers push above the blue Kijun-sen line and the 38.2% Fibo of 0.6088, initial resistance could come from the 20-day SMA, currently at 0.6183. Climbing higher, the 50.0% Fibo of 0.6270 and the 0.6310 resistance could halt upside movements. In case of a break above these levels too, the 61.8% Fibo at 0.6450, marginally above the 40-day SMA, are coming next.

In conclusion, the very short-term bias has turned slightly up after the bounce off 0.5506, but if the price shifts above the six-month peak of 0.7030, the picture could turn positive in the medium-term.