Chart of the week – AUD/USD
AUD/USD corrective decline may be over
Short-term technical analysis
- The recent three week decline of -386 pips seen in the AUD/USD from its psychological level of 0.8000 printed on 25 February high (also its 52-week high) has managed to stall right at the lower boundary of its major ascending channel on two occasions; 5 March and 9 March 2021.
- In conjunction, the 4-hour RSI oscillator has flashed a bullish divergence at its oversold region before the AUD/USD staged a rebound of 179 pips from its major ascending channel support to print a high of 0.7801 on 12 March 2021. Also, the 4-hour RSI has managed to find support at around the 50 level on last Friday, 12 March. These observations suggest short-term upside momentum of price action remains intact.
- Given the occurrence of such positive technical elements, its recent corrective decline from its 25 February high may be over. As long as the 0.7710/7675 key short-term pivotal support holds, the AUD/USD may see the start of another impulsive up leg sequence to target the next resistances at 0.7820 and 0.7920 (minor congestion zone formed on 23/24 February 2021 & 76.4% Fibonacci retracement of the decline from 25 February 2021 high to 9 March 2021 low) in the first step.
- On the other hand, a break below 0.7675 invalidates the recovery scenario to see an extension of the corrective decline towards the next support zone of 0.7560/7500 (swing low areas of 21 December 2020/2 February 2021 & the 50% Fibonacci retracement of the recent up move from 30 October 2020 low to 25 February 2021 high).