AUD/USD has turned increasingly bearish as the pair continues to trade below its 200-day moving average and has retraced more than half of the rise from 0.7328 to 0.8124. Prices are now close to the lowest level in six months.
In the near term, the market is in a consolidation phase, capped by the 61.8% Fibonacci retracement level at 0.7631. AUDUSD needs to rise above this resistance level to ease immediate downside pressure. The 50% Fibonacci at 0.7725 is a strong resistance as well and a break above this area would indicate the start of a more sustained recovery with scope to target the key 0.7900 level and then the psychological at 0.8000. A re-test of the 0.8124 peak could set the AUDUSD on the path for a resumption of the May-August uptrend.
A breach of the 0.7531 low would make AUDUSD more vulnerable and weak with increased odds to fall through 0.7460 to reach 0.7328. Such a move would strengthen the bearish outlook.
Th RSI has no clear direction now and is pointing to more range trading in the near term. The overall market structure remains bearish as long as prices remain below the 200-day MA, with a high probability of AUDUSD continuing its downward trajectory.
by Selena Nicholas, XM Investment Research Desk