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  • AUD/USD remained under some heavy selling pressure for the fifth consecutive session.
  • Slightly oversold conditions warrant some caution before placing aggressive bearish bets.
  • The set-up still supports prospects for an extension of the ongoing downward trajectory.

The AUD/USD pair extended its recent sharp pullback from levels beyond the 0.7400 mark and witnessed some heavy selling for the fifth consecutive session. The downward momentum pushed the pair to two-month lows, around the 0.7030 level, closer to a previous strong resistance breakpoint.

The mentioned region also marks an important confluence support – comprising of 100-day SMA and the 61.8% Fibonacci level of the 0.6776-0.7414 positive move. A convincing breakthrough will be seen as a fresh trigger for bearish traders and pave the way for a further near-term depreciating move.

Meanwhile, technical indicators on hourly charts are already flashing oversold conditions. This coupled with the fact that RSI (14) on the daily chart has moved on the verge of sliding below the 30 mark warrants some near-term consolidation or a modest bounce before the next leg down.

That said, any attempted recovery move back towards the 0.7070-75 region might still be seen as a selling opportunity. This, in turn, should keep a lid on further gains for the major near the 50% Fibo level, just ahead of the 0.7100 round-figure mark.

Conversely, sustained weakness below the 0.7030 congestion zone now seems to accelerate the fall towards the key 0.7000 psychological mark. Some follow-through selling has the potential to drag the pair further towards the next major support near the 0.6925 horizontal zone.

AUD/USD daily chart

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Technical levels to watch