- AUDUSD hit a fresh three-month peak of 0.6541 on Wednesday
- But quickly pared some gains, hinting that the way to recovery is long
- Momentum indicators diverge from the price action
AUDUSD had been in an aggressive decline following a double top pattern in mid-July, with the pair posting consecutive multi-month lows. Even though the price spiked upwards following its bounce off the one-year low of 0.6271, its advance seems to be faltering, despite the momentum indicators being tilted to the upside.
Should the recent setback extend, the price could initially test the May low of 0.6457. A break beneath that region could pave the way for August-September support of 0.6363 ahead of the November bottom of 0.6337. Failing to halt there, the pair might revisit its one-year low of 0.6271.
On the flipside, bullish actions could propel the price towards the November resistance of 0.6521, which also held strong in September and August. Conquering this barricade, the bulls might attack the recent three-month high of 0.6541. Further upside attempts could then stall at the July support of 0.6594, which coincides with the 200-day simple moving average (SMA).
In brief, AUDUSD’s rebound appears to be losing steam amid diverging technical signals. For the bulls to regain confidence that the recovery could resume, the pair must reclaim the 200-day simple moving average (SMA).