AUDUSD traded lower today after triggering some selling orders slightly below the downtrend line drawn from the high of May 10. In the bigger picture, the pair is not only trading below that line, but also below the key area of 0.6625, which acted as the lower boundary of the sideways range that contained most of the price action between February 24 and May 23. This paints a negative short-term outlook for now.
Both the RSI and the MACD are lying below their equilibrium lines, indicating bearish momentum, and corroborating the notion of further declines. Although the MACD is still running above its trigger line, it shows signs of topping, suggesting that it could cross below that line soon.
That said, for the short-term downtrend to continue, the pair may need to break below the low of May 26 at 0.6490. This will confirm a lower low and may see scope for declines towards the 0.6385 zone, marked by the low of November 10. If the bears don’t stop there, then they may extend their march towards the 0.6270 territory, defined as support by the lows of October 24 and November 3.
On the upside, a break back above 0.6625 will turn the bias back to neutral, while for the picture to brighten, the bulls may have to reach and breach the 0.6795 territory, which is the upper boundary of the aforementioned sideways range. Such a move could set the stage for advances towards the 0.6920 hurdle, marked by the high of February 21, the break of which could pave the way towards the peak of February 14, at around 0.7030.
To sum up, AUDUSD has been trading in downtrend mode below the lower end of a prior sideways range that contained the price action between late February and late May. This suggests that another round of declines is possible, but a dip below 0.6490 may be the move to confirm that.