Technical Analysis – Can the AUDUSD bearish breakout last?
May 31, 2023 2:27 pmVideo
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AUDUSD has finally broken below the rectangle that has been in place since February 24, as the bears’ third attempt appears to be successful. The next challenge for AUDUSD bears is to push this pair aggressively lower and negate any thoughts of a false breakout.
At this juncture, the momentum indicators are on the bears’ side. The Average Directional Movement Index (ADX) has climbed to the highest level since the January 2023 rally, signaling a powerful bearish trend. A similar message comes from the RSI and only the Stochastic oscillator is somewhat spoiling the party. It is scraping the lower end of its oversold territory meaning that the pace of the current downleg could moderate going forward.
The bears are keen on keeping the bearish pressure up and holding AUDUSD below the 0.6521 level set by the 23.6% Fibonacci retracement of the April 5, 2022 – October 13, 2022 downtrend at 0.6521. The path then appears to be clear until the November 3, 2022 low of 0.6271, but it is unlikely to be a one-way street move.
On the other hand, the bulls are probably anxious and want to regain the 0.6521 spot. Should this occur, they would try to push the pair towards the lower boundary of the rectangle at 0.6563, and then potentially set their eyes on the key 0.6781-0.6692 range.
To conclude, AUDUSD bears managed to break the recent rectangle and pushed the pair below 0.6521. They have to maintain the bearish pressure in order to avoid calls for a false breakout.
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