AUDUSD has been flirting with the 200-weekly simple moving average (SMA) around 0.7240 for the past fortnight while struggling to surpass the 61.8% Fibonacci of the 0.8135-0.5701 downtrend at the same time. The last time the price touched the long-term SMA was in 2018.
The pair violated the 2018 downward pattern and increased the odds for further recovery after crossing above the previous high of 0.7030 and jumping out of the Ichimoku cloud. A bullish cross between the 20- and 50-weekly SMAs is also in progress and should it be completed, the bull market could go forward. However, this does not mean that downside corrections cannot occur, especially when the price is fighting a key obstacle and the momentum indicators are losing steam; the RSI seems to be flattening just below its 70 overbought mark, while the Stochastics look to be shifting south again.
The 0.7030 level has been a key buffer to downside pressures during 2019, hence it would be closely watched if the price decelerates, keeping the medium-term outlook positive. Beneath that, the 50% Fibonacci of 0.6836 could deter any decline towards the 0.6680 key barrier, where the shorter-term SMAs are ready to intersect. If sellers persist, the spotlight would turn straight to the supportive blue Kijun-sen line around 0.6390.
In case the 200-weekly SMA gives way, the pair may retest the 0.7400 number before crawling up to the 78.6% Fibonacci of 0.7580. Beyond that, the rally is expected to stall around 0.7750.
Summarizing, AUDUSD is holding a positive-to-neutral bias. A sustainable break above the 200-weekly SMA could confirm additional gains, while a drop below 0.7030 would downgrade the outlook back to neutral.
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