Technical Analysis – AUDUSD rally looks to be running out of fuel

Christina Parthenidou, XM Investment Research Desk

AUDUSD bulls gathered momentum above the 200-period simple moving average (SMA) and hit a one-month high of 0.6832 on Thursday, sending the RSI and the Stochastics in the four-hour chart towards the overbought territory.

Hence, the odds for a downside correction are rising. However, if the price manages to hold within the 0.6800 area, a rally towards the 0.6860-0.6880 resistance zone cannot be ruled out. In case upside pressure persists, the pair could also challenge the 0.6910 obstacle, where the price has strongly bounced several times so far this year.

Otherwise, a closing price under 0.6800 may generate losses towards 0.6780, while lower, a rebound could also occur near 0.6730 and the short-term uptrend line drawn from the 0.6670 bottom.

Meanwhile in the bigger picture, the pair is in a range with an upper boundary at 0.6893 and a lower boundary at 0.6670 which if violated could direct the market accordingly.

In short, AUDUSD is looking cautiously bullish in the short-term as the technical indicators signal overbought conditions, while in the bigger picture the pair is holding a neutral profile.