Technical Analysis – AUD/USD risk tilted to the downside – holds below 23.6% Fibonacci mark
AUD/USD retreats over the last couple of sessions and risk is still to a bearish correction as price continues to drift lower from the 0.7990 resistance level. The price posted a pullback on the 20-day simple moving average on Monday and slipped below the 23.6% Fibonacci retracement at 0.7826 level of the upleg from 0.6820 to 0.8135. Price action is at the moment taking place not far below this area.
Momentum indicators are pointing to a negative bias in the short-term with the MACD just below the zero line and the stochastic oscillator deep in bearish territory. However, the stochastic is ready to reach the oversold area and the %K line is attempting a bearish cross with the %D line, suggesting further downside pressure to come.
Further losses should see the 0.7730 – 0.7755 area, which is acting as a major support. If prices fell below the aforementioned zone, it would reinforce the bearish structure in the medium-term and open the way towards the next key support level of 38.2% Fibonacci mark at 0.7635.
In the event of an upside reversal, the 23.6% Fibonacci level could act as a barrier before being able to re-challenge the 40-day SMA near 0.7917 at the time of writing. A break above this level could shift the outlook to a more bullish one as it could take the pair towards the 0.7990 resistance level.
It is worth mentioning that AUD/USD has been holding within an ascending move since January 2016 and tested several times the uptrend line.