AUD/USD Technical Analysis: Aussie Dollar Upswing Topping?
AUD/USD TECHNICAL OUTLOOK: BEARISH
- Aussie Dollar bounces, hits 6-week high vs. US counterpart
- Dominant trend still bearish, invalidation above 0.70 mark
- Near-term chart hints at possible top, confirmation needed
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The Australian Dollar has staged an impressive recovery against its US counterpart, with a five-day winning streak bringing prices to retest the 0.6854-71 inflection area. A daily close above that faces a dense block of back-to-back resistance levels, but the true test of buyers’ mettle comes at the 2019 downtrend’s outer limit, now just above the 0.70 figure.
Zooming in to the four-hour chart reveals the upswing may be losing steam however. AUD/USD has already traded through rising trend support defining the rally’s lower bound. Negative RSI divergence reinforces the sense that upside momentum ebbed. Turning lower from here would mark recent gains as corrective and set the stage for resumption of the longer-term trend lower.
Calling a top seems premature without further confirmation however. At this stage, the loss of upward thrust may yet turn out to be a pause before the move higher is re-engaged. Establishing a foothold back below the 38.2% Fibonacci retracement at 0.6829 would be a start in that direction. A clear-cut reversal signal – like a bearish candlestick pattern – on the daily chart might also be compelling.
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.