AUDUSD opened above the red Tenkan-sen line on Thursday, with scope to finally snap the Ichimoku line, which held the bulls under control since mid-June, and re-challenge the nearby 0.7400 resistance territory.
The positive momentum in the RSI is currently endorsing the bullish action above the eight-month low of 0.7288, though some caution is still required as the indicator has yet to create a new higher high, maintaining a sideways trajectory below its 50 neutral level. The upside reversal in the MACD is also encouraging, but a break into the positive zone would generate stronger bullish signals.
In other cautious warnings, the 50- and 200-day simple moving averages (SMAs) have completed a death cross for the first time since 2018, flagging a definitive negative trend reversal.
In the short term, the price may attempt to close above the 0.7400 – 0.7430 area, which encapsulates the 20-day SMA and the 23.6% Fibonacci retracement of the 0.7890 – 0.7288 downleg. If efforts prove successful, the bulls could accelerate towards the 38.2% Fibonacci of 0.7518 unless the 0.7475 barrier capes the rally. Steeper increases could meet the 50-day SMA at 0.7559, while a decisive step above the 50% Fibonacci of 0.7589 and the 200-day SMA could be a bigger achievement.
Should selling pressures resurface, the spotlight will turn back to the 0.7288 low, a break of which could find immediate support within the 0.7255 – 0.7230 region, last seen in November. If the latter fails to act, the pair could stretch its downtrend towards the restrictive line from January around 0.7130.
In brief, buying pressures could persist in AUDUSD, though only a close above 0.7030 would confirm a bullish bias. In terms of the market’s prevailing trend, the downward direction may stay intact for now.