AUDUSD has been in a tight range, unable to recover from Tuesday’s crash to 0.6579, and this continues to push the pair, on a weekly basis, back to the red zone.
The sharp shorting emerged after the strong rejection near the descending trendline drawn from May 2021, though an upside reversal might be underway as the RSI and the stochastic oscillator are currently flirting with oversold levels. Yet, as long as the indicators hover within the bearish area, downside corrections are more likely than upside ones in the coming sessions. Note that the MACD remains dipped in the negative area as well, while the 20-day simple moving average (SMA) is set to cross below the 200-day SMA following the drop below the 50-day SMA.
Another negative correction could bring the significant area of 0.6520 that caused the rise to 0.7157 under the spotlight. A step beneath that threshold, where the 23.6% Fibonacci retracement of the 0.7660-0.6169 downtrend is also placed, could press the price towards the two support trendlines from August 2021 at 0.6460 and 0.6368 respectively. If the latter gives way, the selloff may speed up to 0.6270.
On the upside, the 0.6630 region has been capping bullish actions over the past two days. Therefore, a move above that zone could send the price towards the 38.2% Fibonacci of 0.6740. The 20- and 200-day SMAs may cement that ceiling, preventing an advance to the 0.6860 handle. The 50% Fibonacci level of 0.6914 could be the next target.
All in all, AUDUSD has not escaped the latest downward pattern, eyeing additional losses to 0.6520. Still, with the price currently trading near oversold levels, an upside correction cannot be ruled out.