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Technical Analysis – AUDUSD back inside rectangle; bullish pressure persists
June 8, 2023 1:27 pmVideo
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The much-anticipated downward AUDUSD breakout managed to disappoint the bears despite reaching 0.6458, the lowest level for almost 7 months. The bulls’ reaction has been forceful with this pair now trading at the midpoint of the rectangle that has been dominating the price action since February 24, 2023.
Apart from the actual price gains, this upleg is important from a sentiment perspective and it increases the possibility for a retest of the upper boundary of the aforementioned pattern at 0.6797. Supporting the bulls’ intentions, the Average Directional Movement Index (ADX) is pointing to a weakened bullish trend and the RSI has climbed above its midpoint. Crucially, the stochastic oscillator is moving higher, signaling the presence of a strong bullish pressure, and the simple moving averages (SMAs) are converging towards the middle of the rectangle.
Should the bulls feel inspired by the latest move, they would try to keep AUDUSD above the key 0.6660-0.6686 area that is populated by the July 14, 2022 low, as well as the 50- and 200-day SMAs. Higher, the 0.6734-0.6739 range set by the 38.2% Fibonacci retracement of the April 5, 2022 – October 13, 2022 downtrend and the 100-day SMA should prove tougher to crack, with 0.6797 being the ultimate target.
On the other hand, the bears are trying to limit their losses and would love to push this pair below the key 0.6660-0.6686 area. If successful, they would be keen on retesting the lower boundary of the rectangle at 0.6574.
To conclude, AUDUSD bears have to pick up their pieces and mount their defense as the overall technical picture is supportive of another push higher, towards the upper boundary of the rectangle.
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