AUDUSD has been experiencing a sharp downtrend after it failed to jump above the 0.7282 level in early June. Although the pair has managed to find its feet in the last couple of four-hour sessions, the descending 50-period simple moving average (SMA) is closing the gap with the 200-period SMA, where a potential violation could reinforce the case of a sustained downside trajectory.
The momentum indicators reflect a cautiously positive near-term bias. Specifically, the stochastic oscillator is ascending steeply, while the MACD histogram has jumped above its red signal line but remains in the negative area.
Should buying interest intensify, the pair might encounter initial resistance at the recent peak of 0.6970. Jumping above this region, the bulls could then aim for the 0.7033 barrier, which has acted both as support and resistance in the past two months. Further upside moves could then stall at 0.7135 before the spotlight turns to the 0.7245 hurdle.
On the flipside, if the pair fails to rebound and continues its descent, 0.6892 may act as the first line of defense. Should that floor collapse, the recent reversal point of 0.6850 could prove a tough obstacle for the bears to overcome. A violation of the latter could pave the way for the two-year low of 0.6828.
Overall, AUDUSD has recently managed to cease its downfall but there is a long way till its short-term picture turns back to bullish. Therefore, a break beneath the 0.6850 floor could revive sellers’ hopes for the resumption of the recent downtrend.