AUDUSD meets the lower boundary of the channel; bullish outlook

AUDUSD is battling with the lower boundary of the medium-term upward sloping channel near the 50.0% Fibonacci retracement level of the downleg from 0.7660 to 0.6170 at 0.6915. The price is finding a key support level near the 0.6870 barrier and the 50-day simple moving average (SMA).

Technically, the oscillators are giving some contradictory signs as the MACD is losing momentum beneath its trigger line and near the zero level, while the RSI is pointing marginally up near the neutral threshold of 50.

Upside moves are likely to find resistance at the 20-day SMA at 0.7000 ahead of the immediate resistance at 0.7030. Also, there is an important zone between the 23.6% Fibonacci at 0.7088 and the eight-month high of 0.7160 that traders could focus on. Rising above this area would help shift the attention to the upside again.

On the other hand, the next target to the downside is the nearby support at 0.6857 before resting near the flat 200-day SMA at 0.6800. At this stage the market would likely see a resumption of the short-term downward move from the 0.7160 peak and put in place a lower low at the 38.2% Fibonacci at 0.6740 and the 0.6690 barrier.

Summarizing, AUDUSD is rebounding off a crucial support of 0.6857 and if there is a successful climb back into the channel, the pair would continue the upside structure. Otherwise, a drop beneath the 200-day SMA may switch the outlook to bearish.

About the author

Melina Deltas

Melina joined XM in December 2017 as an Investment Analyst in the Research department. She can clearly communicate market action, particularly technical and chart pattern setups. Her technically focused method looks mainly at price action across multiple time frames to capture big moves that develop over the years. She has more than 3 years of experience in analyzing financial markets, specializing in forex, indices, and commodities. Melina studied Pure Mathematics at Lancaster University and has a Master's Degree in Monetary and Financial Economics from the University of Cyprus. Currently, she is an associate member of the Society of Technical Analysts (STA) and a Certified Financial Technician (CFTe).