AUDUSD has edged higher over the previous couple of days after it hit a fresh 32-month low of 0.7040 at the start of the week. The price is ready to post a bullish correction after the aggressive selling interest and may challenge again the long-term descending trend line, which has been holding since January 26. The technical picture supports that the upside momentum is likely to continue in the short-term.
From the technical point of view, in the daily timeframe, the stochastic oscillator is strengthening its movement above the oversold zone, after it posted a bullish crossover within the blue %K line and the red %D line, while the RSI indicator is sloping to the upside below the threshold of 50.
If there are further positive pressures, a re-touch of the diagonal line to the upside is possible, but first the pair needs to surpass the 20- and 40-simple moving averages (SMAs) at 0.7185 and 0.7215 respectively in the daily timeframe. A break to the upside of the aforementioned key line would shift the bearish view to a more neutral one and bring the 0.7300 psychological level into view. More advances could open the way towards the 0.7380 barrier, taken from the high on August 21.
Alternatively, should a downside tendency take form again, immediate support will likely come from the 32-month low of 0.7040. A drop below this level would reinforce the downside risk and send prices until the 0.7000 round number, reached on January 2016, creating a lower low in the downward trend.
To summarize, the very short-term timeframe is skewed to the upside, while in the long-term, AUDUSD maintains a clear bearish outlook.