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Technical Analysis – Bullish pressure in AUDUSD lingers

- Achilleas Georgolopoulos

  • AUDUSD in the green again today, above the 50-day SMA

  • The bullish tendency manifesting since the April low persists

  • Momentum indicators mostly mixed; stochastics could send a bullish signal

AUDUSD is recording another green candle as the market appears to be relieved that Fed Chairman Powell did not mention rate hikes as a viable policy option at Wednesday's press conference. AUDUSD is currently battling with the 50-day simple moving average (SMA) and possibly on its way to break the recent series of lower highs and lower lows.

The bullish tendency since the April lows persists but it is not entirely reflected in the momentum indicators. In more detail, the Average Directional Movement Index (ADX) is hovering around its 25-threshold, signaling a trendless market, and the RSI is tentatively edging above its 50-midpoint. More interestingly, the stochastic oscillator is trying to stay above its moving average, setting a course for a higher high and possibly opening the door to a similar move in AUDUSD.

Should the bulls remain confident, they could try to complete their move above the 0.6516-0.6530 range and then test the resistance set by the 100-day SMA at 0.6576. If successful, they could then stage a move towards the July 14, 2022 low at 0.6681 with the 38.2% Fibonacci retracement level of the April 5, 2022 – October 13, 2022 downtrend at 0.6739 also being in the vicinity.

On the flip side, the bears are probably keen to put a stop to the current bullish move. They could try to push AUDUSD back below the 0.6516-0.6530 area, which is populated by the 23.6% Fibonacci retracement level and the 50- and 200-day SMAs, as well as the December 28, 2023 downward sloping trendline. They could then test the support set by May 31, 2023 low at 0.6458.

To sum up, AUDUSD bulls remain in control, but they probably need to rally above the recent 0.6586 high in order to confirm that a new bullish trend is in place.

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