AUDUSD closed above the neckline of the bullish double bottom formation at 0.7274 on Wednesday, and while the price keeps ascending within the 0.7300 territory today, the 200-day simple moving average (SMA) overhead at 0.7320 could still ruin the latest progress in the market as it did in October.
Overbought conditions have not been confirmed yet as the rising RSI is still some distance away 70, while the Stochastics have just crossed above 80 and continue to strengthen. The MACD, which has overcome its previous highs and faces no major resistance levels in sight, is also reflecting a bullish bias for the market. Hence, the base scenario is for the pair to keep gaining ground in the short term.
Should the 200-day SMA give way, the pair could head for the 61.8% Fibonacci retracement of the 0.7554 – 0.6992 downleg at 0.7376. Then, a move beyond the 78.6% Fibonacci of 0.7434 could open the door for October’s high of 0.7554. Further improvement from here would upgrade the medium-term picture from neutral to bullish, shifting the spotlight to 0.7645.
In the bearish scenario, where the price retreats below the 0.7274 neckline, which coincides with the 50% Fibonacci, support could initially come from the 38.2% Fibonacci of 0.7207 and the 20-day SMA. The 23.6% Fibonacci of 0.7126 and the 0.7085 zone could next come to the rescue if selling pressures persist, while lower, the bears may attempt to resume the downward pattern off the three-year high of 0.8006 below the 0.6992 bottom.
Summarizing, AUDUSD has completed a bullish trend pattern above 0.7274, but a sustainable extension above the 200-day SMA is also required before the bulls claim victory.
AUD/USD Completes A Double Bottom Formation; 200-SMA Next In Focus
