AUDUSD Avoids Trend Deterioration, But Upturn Looks Fragile

AUDUSD is healing its injuries after the 50-day simple moving average (SMA), the surface of the Ichimoku cloud, and the ascending trendline from November blocked last week’s aggressive pullback from a three-year high of 0.8006.


The ongoing recovery mode, however, warrants some caution as the MACD continues to weaken below its red signal line, while the red Tenkan-sen and Kijun-sen lines keep extending their sideways move above the price action. Meanwhile, the RSI is looking more encouraging after its bounce above its 50 neutral marks, though whether its progress is sustainable remains to be seen. What is certain, however, is that the broader upward pattern remains safe as long as the price trades above the ascending trendline and its previous lows. Also, the positively aligned 20- and 50-day SMAs keep promoting any trend improvement.


On the upside, the restrictive region around the 0.7870 level could act as immediate resistance ahead of the 0.7933 – 0.7965 territory, while a break above the 0.8000 number is expected to stall near the 0.8035 barriers.


On the downside, the 50-day SMA and the ascending trendline around 0.7750 may keep navigating the price northwards. Slightly lower, the short descending line and the cloud’s upper boundary could provide a guarantee near 0.7685 if the decline gets more legs. If selling pressure persists, the spotlight will shift towards the 0.7600 handles.


In brief, although the latest upturn in AUDUSD looks fragile, with traders likely waiting for a break above 0.7870 to gain buying confidence, the pair is currently keeping its upward trajectory in control.


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