AUDUSD is targeting the 0.7400 level again after successfully piercing the descending trendline drawn from May’s peak of 0.7890 on Wednesday.
The bullish bias is still in place according to the momentum indicators as the MACD continues to grow within the positive area and above its red signal line, and the RSI keeps sloping upwards comfortably above its 50 neutral level. Yet, a careful approach will still be needed since the RSI is flirting with a major resistance territory, while the fast-Stochastics are flattening around their 80 overbought mark for a week now, increasing the odds for a downside correction or some consolidation.
If the 0.7400 bar proves easy to clear, the next challenge could be September’s high of 0.7477. A decisive close higher may reach the key limitations around 0.7531, though a sustainable move above the 200-day simple moving average (SMA) currently at 0.7567 could be a bigger achievement.
Otherwise, a downside reversal may initially seek support near the broken descending trendline and Wednesday’s low of 0.7322. Failure to bounce off the trendline may trigger a steeper decline towards the 0.7230 handle, while not far below, the tentative ascending trendline may prevent a test at the swing low of 0.7169. If not, then the spotlight will shift straight to the nine-month low of 0.7105.
In brief, AUDUSD is in bullish mode, aiming to break into the 0.7400 zone, though some caution is required as buying pressures look somewhat fragile at the moment.