AUDUSD Aims To Hold Above 20-SMA, Short-Term Bias Bullish

Technical analysis of Forex market

AUDUSD looks determined to stay above its 20-day simple moving average (SMA) and the 23.6% Fibonacci level of the 0.7890 – 0.7105 downleg at 0.7290 after barely closing above that line in the past two sessions, with the price gearing up to a two-week high of 0.7340 early on Tuesday.

While the Stochastics are already hovering within the overbought territory, they have yet to show any weakness, keeping the bias skewed to the upside. Also, the RSI managed to extend its uptrend slightly above its 50 neutral mark for the first time since June, while the continuous strength in the MACD is another encouraging sign that positive momentum could last in the short term.

Should the bullish scenario play through, the pair will attempt to overcome the 50-day SMA and the 38.2% Fibonacci of 0.7405 with scope to boost the rally towards the 50% Fibonacci of 0.7497, and more importantly, above the surface of the Ichimoku cloud seen around 0.7528. Such a move would somewhat invalidate the downward pattern, and if the bulls pierce above the cloud too, the focus will turn to the flattening 200-day SMA at 0.7605. Yet, given the negative slope in the 20- and 50-day SMAs, the odds for a trend reversal are still muted.

On the flip side, if the price pulls below the 0.7290 support region, the decline could initially pause around the red Tenkan-sen line and the 0.7230 handle. Beneath that, selling pressures could ramp up towards the 9-month low of 0.7109, where any step lower would worsen the bearish outlook in the broad picture.

Summarizing, AUDUSD is expected to trade bullish in the near term, likely heading for the 0.7405 resistance territory.