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  • AUD/USD recovers early lost ground, albeit seemed struggling to extend the momentum.
  • The formation of a descending triangle, mixed technical indicators warrant caution for bulls.

The AUD/USD pair has managed to recover its intraday losses and was last seen trading in the neutral territory, just below mid-0.7100s during the early North American session.

Bulls, however, seemed struggling to build on the momentum beyond a two-month-old descending trend-line. Given the recent bounce from an important horizontal support near the key 0.7000 psychological mark, the mentioned trend-line constitutes the formation of a descending triangle.

That said, technical indicators on hourly charts have again started gaining positive traction and support prospects for additional gains. However, neutral oscillators on the daily chart haven’t been supportive of any firm near-term direction, warranting caution for aggressive bullish traders.

Hence, it will be prudent to wait for some strong follow-through buying, possibly beyond the 0.7200 mark, before confirming a near-term bullish bias and positioning for any further appreciating move. The AUD/USD pair might then aim to test October monthly swing highs, around the 0.7245 region.

Some follow-through buying should assist the pair to climb further to reclaim the 0.7300 mark. The positive move could get extended and has the potential to push the AUD/USD pair back towards yearly daily closing highs resistance, around the 0.7375-80 supply zone.

On the flip side, the 0.7100 round-figure mark now seems to protect the immediate downside. Any subsequent fall might continue to attract some dip-buying near mid-0.7000s, which if broken decisively might turn the AUD/USD vulnerable to slide towards the 0.7000 horizontal support.

Technical levels to watch