AUDUSD traded higher late on Friday and today after it found support at 0.6190, slightly above the two and a half year low of 0.617 hit on Thursday. Overall, the pair continues to trade below the downtrend line drawn from the high of September 13, as well as below a longer-term downside line, taken from the high of August 11. This keeps the broader outlook negative, but a break below 0.6170 may be needed to signal a continuation of the prevailing downtrend.
Both the short-term oscillators are detecting diminishing downside speed and suggest that some further recovery may be on the cards before the bears decide to shoot again. The RSI, although below 50, has ascended closer to that equilibrium line and it is still pointing up, while the MACD lies below both its zero and trigger lines, but is showing signs of turning north as well.
The bears could recharge from near the 0.6350 zone or the short-term downside line, and aim for another test near the 0.6170/90 area, but a break lower may be needed to justify a downtrend extension. Such a break would confirm a lower low and may pave the way towards the 0.6115 level, the break of which could stretch the slide towards the 0.6050 zone.
On the upside, a move above 0.6350 may confirm the break above the short-term downtrend line, but the pair would still be below the longer-term line. Thus, any further advances could still be seen as a larger correction within a broader downtrend. The bears may allow the bulls to climb towards the 0.64030 barrier, and if they are not willing to reenter the action from around there, then the recovery may extend towards the 0.6540 area, which acted as a ceiling between September 26 and October 6.
To sum up, AUDUSD continues to trade in a downtrend, but it’s been struggling to move below the 0.6170 zone, the break of which would confirm a lower low and thereby the continuation of the prevailing trend.
